LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A client asks to replace the life insured on an existing policy with her younger spouse. The agent should explain that:
- Athe insurer will make the change provided the premium remains exactly the same
- Bthe change can be made by endorsement once the new life insured has been underwritten
- Cthe change is automatic on marriage and requires only a notice to the insurer
- the life insured cannot be changed, so a new contract on the spouse would be required
Correct answer: D) the life insured cannot be changed, so a new contract on the spouse would be required
The contract is built on the life it insures, which determines the risk the insurer accepted. Owners, beneficiaries and coverage amounts can often change, but the life insured cannot be substituted.
Why the other options are wrong
- AThe premium level is irrelevant to whether the life insured can be changed.
- BNo endorsement can substitute a different life under the same contract.
- CMarriage does not alter whose life the contract insures.
Exam tip
Owner and beneficiary can change; the life insured cannot.
Common mistake
Offering to switch the life insured rather than arranging a new contract.
What this tests
CISRO competency component 1.2 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.