LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A 'successor owner' or 'contingent owner' designation:
- AIs prohibited by the Act, since ownership can pass only through the owner's estate under the terms of the will
- BNames a new beneficiary who takes if the primary beneficiary dies before the life insured
- CIs the same as an assignment, since both transfer the owner's rights to another person
- Names who becomes owner if the current owner dies first, keeping the policy out of the estate
Correct answer: D) Names who becomes owner if the current owner dies first, keeping the policy out of the estate
Successor ownership is a planning tool for third-party-owned policies; availability depends on the insurer's contract.
Why the other options are wrong
- ASuccessor owner designations are widely available.
- BIt concerns ownership, not the beneficiary.
- CAssignment transfers rights now; successor ownership takes effect at death.
Exam tip
Successor owner = who controls the policy after the owner's death.
Common mistake
Confusing successor owner with contingent 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
Timed sets weighted like the exam, and review of every question you miss. Free to start.