LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
A client asks what her critical illness policy pays if she dies without ever being diagnosed. The return of premium on death benefit:
- Apays the critical illness benefit in full to her named beneficiary on her death
- refunds the premiums paid to the beneficiary, where the rider has been purchased
- Cis included in every critical illness policy issued in Canada without extra cost
- Dconverts the policy into a life insurance contract on the date of her death
Correct answer: B) refunds the premiums paid to the beneficiary, where the rider has been purchased
Critical illness coverage pays on diagnosis, so without one it would otherwise pay nothing. A return of premium on death rider refunds the premiums to the beneficiary, and it is an optional addition carrying its own cost.
Why the other options are wrong
- AThe living benefit is payable on diagnosis, not on death.
- CThe feature is optional and increases the premium.
- DNo conversion to life insurance occurs on death.
Exam tip
Critical illness pays on diagnosis; a death refund needs its own rider.
Common mistake
Presenting critical illness coverage as though it paid a death benefit.
What this tests
CISRO competency component 1.4 — 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
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