LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
The 'cash surrender value' provision:
- AIs the death benefit payable if the insured dies, less any loans outstanding against the policy
- BGuarantees the investment returns credited to the policy, so the owner can never receive less than the total deposits made
- CApplies to term policies, which build a modest cash value over the term that is paid at expiry
- Sets out the guaranteed values or account value less charges, and the right to surrender less loans
Correct answer: D) Sets out the guaranteed values or account value less charges, and the right to surrender less loans
Surrender values are contractual and, in whole life, guaranteed by schedule.
Why the other options are wrong
- AIt is different from the death benefit.
- BOnly the scheduled values are guaranteed.
- CTerm has no cash value.
Exam tip
CSV: scheduled (WL) or account less charges (UL); tax on gain.
Common mistake
Quoting UL account value as the surrender value without charges.
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 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
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