LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
An insurer pays the beneficiary shown in its records, and a later designation form is then produced. The statutory protection means that:
- the insurer that paid in good faith on its records is generally discharged
- Bthe later form is invalid because it was not received before the payment
- Cthe estate becomes liable to repay the original beneficiary on the family's behalf
- Dthe insurer must pay a second time to the beneficiary named in the later form
Correct answer: A) the insurer that paid in good faith on its records is generally discharged
An insurer paying in good faith according to the designation filed with it is protected. The person named in the later document must pursue the recipient, which is why a change must be filed promptly with the insurer.
Why the other options are wrong
- BA later designation is valid but the insurer was not on notice of it.
- CThe estate is not made liable for the insurer's good faith payment.
- DThe protection exists precisely so the insurer does not pay twice.
Exam tip
File designation changes with the insurer at once; a delay can misdirect proceeds.
Common mistake
Leaving a signed change of beneficiary form in the agent's own file.
What this tests
CISRO competency component 1.5 — 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.