LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
A separating client wants to remove his spouse, who was named irrevocably. The agent should explain that:
- the designation can be changed only with the irrevocable beneficiary's written consent or a court order
- Bthe insurer will change it on request because the couple no longer live together
- Cthe designation lapses once a separation agreement has been signed by both parties
- Dseparation automatically revokes an irrevocable designation under the provincial insurance legislation
Correct answer: A) the designation can be changed only with the irrevocable beneficiary's written consent or a court order
An irrevocable beneficiary holds a vested interest that survives a separation. Removing it requires that person's consent, and the point is often dealt with as part of the negotiated separation agreement.
Why the other options are wrong
- BLiving arrangements do not affect the beneficiary's legal interest.
- CA separation agreement does not by itself cancel the designation.
- DSeparation does not revoke a vested irrevocable interest.
Exam tip
Irrevocable designations survive separation; deal with them in the agreement.
Common mistake
Promising a separating client that the designation can simply be changed.
What this tests
CISRO competency component 1.5 — 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.