LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
A couple buys a policy that pays when either of them dies, to replace the lost income. This joint first-to-die policy:
- APays at the second death, since the policy is designed to fund the estate tax that arises when both spouses have died
- BPays twice, once at each death, since two lives are insured under the same contract for the same premium
- CCovers only one life, with the second person named as beneficiary rather than as a life insured
- Pays on the first death of two lives, after which the policy usually ends, often with a survivor's option
Correct answer: D) Pays on the first death of two lives, after which the policy usually ends, often with a survivor's option
Joint policies have specific provisions on what happens after the first death; survivor options matter.
Why the other options are wrong
- APaying at the second death describes a last-to-die policy.
- BA first-to-die policy pays once.
- CA joint policy covers two lives.
Exam tip
First-to-die: pays at first death; check survivor's insurability option.
Common mistake
Not explaining that the survivor is left uninsured.
What this tests
CISRO competency component 1.4 — 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.