LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A client's attorney under a continuing power of attorney wants to surrender the client's policy for cash. The agent should:
- review the document's scope and consider whether the surrender serves the client's interests
- Brequire the client to attend personally, despite the incapacity the document addresses
- Cprocess it at once, since an attorney has the same authority as the owner in all respects
- Drefuse, because a power of attorney never extends to insurance contracts in Canada
Correct answer: A) review the document's scope and consider whether the surrender serves the client's interests
An attorney must act in the grantor's best interests and within the document's terms. A surrender that benefits the attorney rather than the client is a warning sign of financial abuse and should be questioned.
Why the other options are wrong
- BRequiring attendance defeats the purpose of the power of attorney.
- CAn attorney's authority is bounded by the document and by fiduciary duty.
- DA valid power of attorney can extend to insurance contracts.
Exam tip
Read the power of attorney and ask whose interest the transaction serves.
Common mistake
Processing an attorney's instruction without considering the client's interest.
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.