LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
A client pays the first premium with the application and dies before underwriting is complete. The temporary insurance agreement:
- Apays nothing, since no coverage exists until the policy has actually been issued
- may pay a limited amount if its conditions were met at the time it was signed
- Cpays the full amount applied for, whatever the answers given on the application
- Dconverts automatically into a permanent contract owned by the applicant's estate
Correct answer: B) may pay a limited amount if its conditions were met at the time it was signed
A temporary agreement provides conditional coverage up to a stated maximum while the application is considered. Payment depends on the declarations being accurate and the conditions in the agreement having been satisfied.
Why the other options are wrong
- ACoverage can exist before issue where the agreement was properly given.
- CThe agreement is capped and depends on its conditions being met.
- DNo conversion to a permanent contract occurs on the applicant's death.
Exam tip
Temporary coverage is conditional and capped, not the full amount applied for.
Common mistake
Promising a client that paying with the application secures full coverage.
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.