LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
A life insurance contract generally 'takes effect' when:
- The policy is delivered and the first premium paid, with no change in insurability
- BThe application is signed, since that is when the applicant makes the offer and the insurer's obligation begins
- CThe agent confirms coverage to the client, since the agent has the insurer's authority to bind from the moment the application is signed
- DThe medical examination is completed, since that is when the insurer has everything it needs
Correct answer: A) The policy is delivered and the first premium paid, with no change in insurability
The delivery requirement and 'no change in health' condition protect the insurer against changes during underwriting. Agents must ask about changes at delivery.
Why the other options are wrong
- BSigning is only the offer.
- CAgents have no binding authority.
- DThe medical is a step in underwriting.
Exam tip
In force = delivery + first premium + no change in insurability.
Common mistake
Delivering a policy without asking about health changes.
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.