LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A policy is absolutely assigned to a new owner while a revocable beneficiary remains named. The effect is that the assignee:
- Abecomes the beneficiary automatically, replacing the person previously named
- Bacquires nothing at all until the existing beneficiary agrees in writing to the assignment being made
- acquires the owner's rights, including the ability to change the revocable designation
- Dacquires the right to receive the death benefit but cannot alter any policy term
Correct answer: C) acquires the owner's rights, including the ability to change the revocable designation
An absolute assignment transfers ownership, so the assignee may exercise the owner's rights, including changing a revocable beneficiary. An irrevocable designation would block that and require the beneficiary's consent.
Why the other options are wrong
- AAssignment transfers ownership rather than making the assignee beneficiary.
- BA revocable beneficiary has no vested interest and cannot block an assignment.
- DThe assignee takes the owner's rights, which include altering the contract.
Exam tip
Absolute assignment transfers ownership; an irrevocable beneficiary blocks it.
Common mistake
Confusing an assignment of ownership with a change of beneficiary.
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
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