LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A client wants to name her daughter as beneficiary but cannot find the insurer's form. Under the Insurance Act, a designation may be made:
- AOnly verbally, in the presence of the agent, who records the designation on the file and reports it to the insurer
- BOnly in the original application, since the designation forms part of the contract from issue
- COnly by the agent, who completes the designation on the owner's instructions
- In the contract, in a signed declaration identifying the contract, or in a will, with the latest valid one prevailing
Correct answer: D) In the contract, in a signed declaration identifying the contract, or in a will, with the latest valid one prevailing
The statutory forms of designation and priority rules determine who is paid. Designations must be filed with the insurer to bind it.
Why the other options are wrong
- AA beneficiary designation must be in writing.
- BDeclarations and wills also work.
- CThe owner designates, not the agent.
Exam tip
Designation: contract, declaration or will; latest valid prevails.
Common mistake
Assuming a later will automatically overrides a policy designation without meeting the rules.
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.