LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A client wants to buy a new policy on the life of her former spouse, from whom she receives support payments. The agent should explain that:
- Ano policy can ever be issued on the life of a former spouse once the divorce has been finalized
- a financial interest such as support may found insurable interest, and consent is still required
- Cconsent is unnecessary because the support order gives her rights over his affairs
- Dshe may buy the policy without disclosing it, provided she pays the premiums herself
Correct answer: B) a financial interest such as support may found insurable interest, and consent is still required
An ongoing financial dependency can supply insurable interest. The life insured must still consent in writing to a policy owned by someone else, which is what prevents wagering on another person's life.
Why the other options are wrong
- ADivorce does not automatically remove a financial interest in a former spouse's life.
- CA support order does not substitute for the consent of the life insured.
- DA policy on another life cannot be taken out without that person's knowledge.
Exam tip
A policy on another adult's life always needs that person's written consent.
Common mistake
Treating a financial interest as removing the need for consent.
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.