LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
A 'counter-offer' by the insurer (policy issued with a rating or exclusion) becomes a contract when:
- AThe agent accepts the changed terms on the client's behalf, since the agent holds the client's authority for the transaction
- BAutomatically after 30 days, since silence on the part of the applicant is treated as acceptance of the insurer's terms
- The applicant accepts it, usually by signing an amendment and paying, with no change in insurability
- DIt is mailed to the applicant, since the insurer's offer takes effect on dispatch under the postal rule
Correct answer: C) The applicant accepts it, usually by signing an amendment and paying, with no change in insurability
Modified offers require the applicant's acceptance. Agents must explain the changes and obtain signed acceptance.
Why the other options are wrong
- AAgents cannot accept for clients.
- BThere is no automatic acceptance.
- DMailing is not acceptance.
Exam tip
Modified policy = counter-offer; signed amendment + premium = acceptance.
Common mistake
Leaving a rated policy with the client without a signed amendment.
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.