LLQP Ethics & Professional Practice · Component 1.6 · 60% of the exam
An insurer takes several months to settle a death claim after receiving complete proof. The legislation generally provides that:
- Athe insurer owes nothing extra, since payment timing is entirely within its discretion
- Bthe claimant must begin a lawsuit before any interest can be considered by the insurer at all
- interest accrues on the benefit from the date of death or as the statute otherwise provides
- Dthe benefit is reduced by an administration charge for each month that passes
Correct answer: C) interest accrues on the benefit from the date of death or as the statute otherwise provides
Insurance legislation requires payment within a set period after satisfactory proof and provides for interest. A claimant who believes the delay is unreasonable can escalate through the insurer's complaints officer and then the ombudservice.
Why the other options are wrong
- AStatutory time limits and interest apply to the payment of claims.
- BInterest arises under the statute without the need for litigation.
- DNo administration charge is deducted for the passage of time.
Exam tip
Statutory time limits and interest apply once satisfactory proof is received.
Common mistake
Telling a claimant that settlement timing is entirely up to the insurer.
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.