LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
The 'beneficiary' of a life insurance contract:
- AMust consent in writing to the designation before the insurer will record it on the contract and issue the policy
- BOwns the policy jointly with the applicant, since the beneficiary has an interest in the proceeds
- CMust be a relative of the life insured, since only relatives have insurable interest
- Whoever the owner designates to receive the proceeds, without any need for insurable interest
Correct answer: D) Whoever the owner designates to receive the proceeds, without any need for insurable interest
Beneficiary designation is the owner's right. Charities, trusts and unrelated persons may be named.
Why the other options are wrong
- AConsent is not required for a revocable designation.
- BOwnership is separate from the beneficiary role.
- CNo relationship is required.
Exam tip
Beneficiary = anyone the owner names; no insurable interest needed.
Common mistake
Believing only family members can be beneficiaries.
What this tests
CISRO competency component 1.2 — 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.