LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A policy owner has become mentally incapable and no power of attorney exists. Ownership rights will generally be exercised by:
- Athe insurer, which administers the contract on behalf of an incapable owner
- Bthe agent, acting on the instructions the owner gave before losing capacity
- a guardian of property appointed by the court or the applicable provincial authority
- Dthe named beneficiary, whose interest in the contract is now the strongest
Correct answer: C) a guardian of property appointed by the court or the applicable provincial authority
Without a power of attorney, someone must be appointed to manage the owner's property. Until that happens the contract can generally only continue as it stands, which is why the document should be put in place early.
Why the other options are wrong
- AAn insurer administers the contract but does not assume the owner's rights.
- BAn agent has no authority to act for an incapable client.
- DA beneficiary has no right to exercise the owner's powers.
Exam tip
No power of attorney means a court or statutory appointment is needed.
Common mistake
Acting on earlier instructions after a client has lost capacity.
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.