LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
In life insurance, the 'offer' is usually made by:
- AThe beneficiary, who asks the insurer to issue a policy on the life insured for the beneficiary's protection
- The applicant, by submitting the application; the insurer accepts as applied for or counter-offers
- CThe insurer through its brochure and rate card, which the applicant accepts by signing the application and paying the premium
- DThe agent, who offers coverage to the client on the insurer's behalf at the point of sale
Correct answer: B) The applicant, by submitting the application; the insurer accepts as applied for or counter-offers
Understanding who offers and who accepts explains why a modified policy is a counter-offer needing the applicant's acceptance.
Why the other options are wrong
- AThe beneficiary is not a party.
- CBrochures are invitations to treat, not offers.
- DThe agent transmits the offer.
Exam tip
Application = offer; policy as applied for = acceptance; modified policy = counter-offer.
Common mistake
Treating a rated policy as automatically in force.
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
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