LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
A 'return of premium' provision on term insurance:
- AIs free, since the insurer funds the refund from the investment return on the premiums it has held
- Refunds all or part of premiums if the insured survives the term, at a materially higher premium
- CIs standard on every term policy, since the Act requires insurers to return unused premiums at the expiry of the term
- DPays the premiums back to the beneficiary at death, in addition to the face amount of the policy
Correct answer: B) Refunds all or part of premiums if the insured survives the term, at a materially higher premium
ROP term is a design variant; the agent should compare its cost with investing the premium difference.
Why the other options are wrong
- AReturn-of-premium term costs materially more than plain term.
- CIt is an optional variant.
- DThe death benefit is separate.
Exam tip
ROP term: refund at expiry, higher premium.
Common mistake
Presenting ROP as 'free insurance'.
What this tests
CISRO competency component 1.4 — 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.