LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
A term policy's 'conversion' provision:
- AIs automatic at the end of the term, so the owner need do nothing to obtain permanent coverage
- BConverts the policy to its cash value, which the owner may take as a lump sum or apply to a new policy
- Lets the owner exchange term for permanent coverage without evidence before a stated age, at attained-age rates
- DRequires a medical examination, since the insurer is taking on a longer-term risk than it originally priced when the term was issued
Correct answer: C) Lets the owner exchange term for permanent coverage without evidence before a stated age, at attained-age rates
Conversion rights are valuable; deadlines are strict and the agent should track them.
Why the other options are wrong
- AThe owner must elect to convert.
- BIt converts to permanent insurance, not cash.
- DConversion requires no medical evidence; that is its value.
Exam tip
Conversion: to permanent, no evidence, before the deadline.
Common mistake
Missing a conversion deadline for a client whose health has declined.
What this tests
CISRO competency component 1.3 — 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.