LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
An employee covered under her employer's group life plan asks the agent to change a policy term for her. The agent should explain that:
- Ashe may change any term of the group contract because it covers her own life
- Bgroup contracts have no terms capable of being changed by anyone once they are in force
- the employer is the policyholder and the contract terms are set between employer and insurer
- Dthe insurer will change the terms for any individual member who submits a written request
Correct answer: C) the employer is the policyholder and the contract terms are set between employer and insurer
In group insurance the employer holds the master contract and the employee holds a certificate. Members can usually name a beneficiary and make elections the plan allows, but the contract terms themselves are negotiated by the policyholder.
Why the other options are wrong
- ABeing a life insured does not confer the rights of a policyholder.
- BTerms can be changed, but by agreement between employer and insurer.
- DAn insurer negotiates terms with the policyholder, not with individual members.
Exam tip
Employer equals policyholder; employee equals certificate holder.
Common mistake
Treating a group certificate holder as though they owned the contract.
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.