LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A 'contingent' (secondary) beneficiary:
- Receives the proceeds only if the primary beneficiary predeceases the life insured or disclaims
- BShares equally with the primary beneficiary, since both are named on the same contract and the Act treats them alike
- CIs always the estate, since the Act provides that the estate takes whenever the primary cannot
- DCannot be named on a life policy, since the Act recognizes only one beneficiary at a time
Correct answer: A) Receives the proceeds only if the primary beneficiary predeceases the life insured or disclaims
Contingent designations prevent proceeds from defaulting to the estate. They are a basic planning tool.
Why the other options are wrong
- BThe contingent takes only if the primary cannot.
- CA contingent is a person or entity the owner names.
- DContingent beneficiaries are routinely named.
Exam tip
Always name a contingent beneficiary to avoid the estate.
Common mistake
Leaving the contingent beneficiary blank.
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.