LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
The 'assignment' provision typically states that:
- AThe agent must approve any assignment, since the agent is responsible for the suitability of the arrangement
- BAssignment is prohibited, since a life insurance contract is personal to the owner and cannot be transferred
- CBeneficiaries can assign their interest to a lender as security, since they have an expectancy in the proceeds
- The owner may assign, but the insurer is not bound until written notice reaches its head office
Correct answer: D) The owner may assign, but the insurer is not bound until written notice reaches its head office
Notice to the insurer protects everyone: the insurer pays according to its records.
Why the other options are wrong
- AThe agent has no approval role.
- BAssignment is permitted.
- COnly the owner assigns.
Exam tip
Assignment binds the insurer only on written notice.
Common mistake
Failing to send the assignment to the insurer.
What this tests
CISRO competency component 1.4 — 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 'personal representative' (executor or administrator) of a deceased owner:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.