LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
A 'conditional insurance agreement' (temporary insurance receipt) provides:
- ANo coverage until the policy is issued, since it merely acknowledges receipt of the first premium
- Limited coverage from application if the premium is paid and the applicant is insurable at standard rates
- CCoverage regardless of insurability, since the insurer has accepted the premium
- DUnlimited coverage for the full amount applied for, until the insurer makes its decision on the application, whatever the outcome
Correct answer: B) Limited coverage from application if the premium is paid and the applicant is insurable at standard rates
Conditional coverage bridges the underwriting period. Its conditions (insurable as a standard risk) and limits must be explained.
Why the other options are wrong
- AIt provides limited coverage.
- CInsurability at standard rates is a condition.
- DConditional coverage is capped at a stated maximum amount.
Exam tip
Conditional receipt: premium paid, standard risk, capped amount, limited time.
Common mistake
Telling a client the conditional receipt covers them 'no matter what'.
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.