LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A grandparent wants to make a fifteen-year-old the owner of a policy on the child's own life. The agent should explain that:
- a minor's capacity to contract is limited, so ownership arrangements need careful structuring
- Bminors cannot be insured, so no contract on the child's life can be issued
- Cthe child automatically becomes owner at birth of any policy insuring the child's life
- Da minor may hold every ownership right with no restriction at all under provincial law
Correct answer: A) a minor's capacity to contract is limited, so ownership arrangements need careful structuring
A minor's contracts are generally voidable, and insurers restrict the rights a minor owner may exercise. The usual approach is for an adult to own the policy, with ownership transferred at the age of majority.
Why the other options are wrong
- BPolicies insuring the lives of minors are commonly issued.
- COwnership follows the application, not the identity of the life insured.
- DA minor's ability to exercise ownership rights is limited in practice and in law.
Exam tip
Minor ownership is restricted; an adult owns and transfers later.
Common mistake
Recording a minor as owner because the policy insures that child.
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.