LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A minor as beneficiary raises the issue that:
- AMinors cannot be named at all, since the Act requires every beneficiary to have legal capacity
- BThe agent holds the funds in trust until the child reaches majority, under the licensing rules that govern client money
- CThe proceeds are forfeited to the insurer if no adult beneficiary is named on the contract
- Insurers cannot pay a minor directly, so a trustee should be named or the proceeds may go to court
Correct answer: D) Insurers cannot pay a minor directly, so a trustee should be named or the proceeds may go to court
Trustee designations are a standard part of naming minor beneficiaries. Without one, access is delayed and controlled by a court.
Why the other options are wrong
- AMinors can be named, with a trustee.
- BAgents never hold proceeds.
- CProceeds for a minor are never forfeited.
Exam tip
Minor beneficiary → name a trustee.
Common mistake
Naming a minor child with no trustee.
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.