LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
A client's will, signed after the policy designation, leaves the insurance proceeds to a different person. The position in common law provinces is that:
- Athe executor decides which of the two documents to follow after reviewing the client's intentions
- a later declaration in a will can change the designation if it identifies the contract adequately
- Cthe will has no effect on insurance proceeds under any circumstances whatever
- Dthe policy designation always prevails because it was filed directly with the insurer
Correct answer: B) a later declaration in a will can change the designation if it identifies the contract adequately
A will can operate as a declaration and alter a designation where it identifies the contract sufficiently. The risk of confusion and disputes is why designations should be changed with the insurer rather than through a will.
Why the other options are wrong
- AAn executor applies the law rather than choosing between documents.
- CA will can affect insurance proceeds where it meets the statutory requirements.
- DA later valid declaration can displace an earlier designation.
Exam tip
Change designations with the insurer, not through a clause in a will.
Common mistake
Telling a client a will can never affect a beneficiary designation.
What this tests
CISRO competency component 1.5 — 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.