LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
An applicant dies after the insurer approved and issued the policy but before it was delivered and the first premium paid. Coverage will generally depend on:
- Athe date the insurer's underwriter signed the approval, which always starts the coverage
- Bwhether the beneficiary was able to locate the issued policy among the applicant's papers
- the terms of any temporary agreement and the contract's own conditions for taking effect
- Dwhether the agent had already earned commission on the transaction in question
Correct answer: C) the terms of any temporary agreement and the contract's own conditions for taking effect
Whether a contract has taken effect turns on the delivery and payment conditions and on any temporary agreement given at application. Prompt delivery matters precisely because it removes this uncertainty.
Why the other options are wrong
- AUnderwriting approval alone does not always place a contract in force.
- BLocating the document does not determine whether the contract took effect.
- DCommission has no bearing on when coverage begins.
Exam tip
Coverage before delivery depends on the temporary agreement and the contract terms.
Common mistake
Assuming approval by the underwriter automatically starts the coverage.
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.