LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
A client misses a premium and dies twenty days later without paying it. The grace period means the insurer will generally:
- Areinstate the policy first, which requires evidence of insurability from the deceased
- pay the claim, deducting the overdue premium from the death benefit
- Cdeny the claim, since coverage ended the day the premium fell due and was unpaid
- Dpay only the cash surrender value, as the contract lapsed at the due date
Correct answer: B) pay the claim, deducting the overdue premium from the death benefit
The grace period keeps coverage in force for a stated time after a missed premium, commonly thirty or thirty-one days. A death within it is covered, with the outstanding premium deducted from the proceeds.
Why the other options are wrong
- ANo reinstatement is needed while the policy is still within its grace period.
- CCoverage continues through the grace period rather than ending at the due date.
- DThe full death benefit is payable, not merely the cash value.
Exam tip
Death in the grace period is covered, less the premium owing.
Common mistake
Telling a family the policy lapsed on the premium due date.
What this tests
CISRO competency component 1.3 — 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.