LLQP Ethics & Professional Practice · Component 1.6 · 60% of the exam
An insured dies during the grace period with one premium unpaid. At claim the insurer will normally:
- Apay only a proportion of the benefit matching the premiums actually received
- Brequire the beneficiary to pay the outstanding premium before releasing anything
- Cdeny the claim because the contract was not fully paid up at the date of death
- pay the death benefit less the premium that was outstanding at the death
Correct answer: D) pay the death benefit less the premium that was outstanding at the death
Coverage continues through the grace period, so the claim is payable. The insurer simply deducts the premium owing from the proceeds rather than asking the beneficiary to pay it separately.
Why the other options are wrong
- ABenefits are not prorated to premiums received.
- BThe deduction is made from the proceeds, not demanded in advance.
- CThe grace period exists precisely to preserve coverage in this situation.
Exam tip
Grace period death equals full benefit less the premium owing.
Common mistake
Asking a beneficiary to pay an overdue premium before a claim is settled.
What this tests
CISRO competency component 1.6 — 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.