LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
If the applicant dies after signing the application but before the policy is issued, and no conditional coverage applies:
- AHalf the benefit is paid, since the insurer had accepted the application in principle when it was received
- No contract exists and nothing is payable; premiums are refunded, since the offer was never accepted
- CThe full benefit is paid, since the applicant had done everything required and the delay was the insurer's
- DThe agent pays the benefit personally, since the agent failed to secure coverage before the death
Correct answer: B) No contract exists and nothing is payable; premiums are refunded, since the offer was never accepted
Without acceptance there is no contract. Conditional receipts exist for this gap.
Why the other options are wrong
- AThere is no partial payment; without a contract nothing is payable.
- CNo contract was formed.
- DAgents have no liability absent negligence.
Exam tip
No acceptance = no contract; conditional coverage fills the gap.
Common mistake
Failing to collect the first premium with the application when conditional coverage is available.
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.