LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
An agent delivers a policy containing an exclusion the client never saw, and the client signs nothing. The likely position is that:
- the amended terms were not accepted, so the coverage position is uncertain and must be resolved
- Bthe exclusion applies only after the contestability period has finally expired
- Cthe whole contract is void and the premium must be refunded to the client at once
- Dthe exclusion is fully effective because it is printed in the issued contract document
Correct answer: A) the amended terms were not accepted, so the coverage position is uncertain and must be resolved
Where an insurer issues on different terms, acceptance must be obtained, usually by the client signing an amendment at delivery. Without it, whether the contract was formed on those terms becomes a dispute best avoided by proper delivery.
Why the other options are wrong
- BAn exclusion is not suspended by the contestability period.
- CThe contract is not automatically void; the position is unresolved.
- DPrinting a term does not prove the client accepted it.
Exam tip
Amended terms need a signed acknowledgement at delivery.
Common mistake
Handing over a modified policy without obtaining the client's acceptance.
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.