LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
A contract of life insurance without insurable interest or the consent of the life insured is:
- Void under the Insurance Act, since it would amount to a wager on a human life
- BVoidable at the insurer's option only, so it remains in force unless the insurer chooses to set it aside
- CEnforceable by the beneficiary, since the beneficiary was not responsible for the defect in the application
- DValid as long as the premiums have been paid, since the insurer accepted the risk with knowledge of the facts
Correct answer: A) Void under the Insurance Act, since it would amount to a wager on a human life
The statute declares such contracts void. Agents must ensure insurable interest or consent is documented at application.
Why the other options are wrong
- BIt is void, not merely voidable.
- CA void contract has no beneficiary rights.
- DIt is void by statute regardless of premiums.
Exam tip
No insurable interest and no consent = void.
Common mistake
Taking an application on a friend's life without the friend's signed consent.
What this tests
CISRO competency component 1.1 — 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.