LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
The effect of naming a charity as beneficiary is that:
- AThe charity must consent to the designation in writing before the insurer will record it
- BThe estate receives the proceeds and donates them under the will, since a charity cannot be paid directly by an insurer
- The charity receives the proceeds directly, the estate may claim a donation credit, and the designation is revocable
- DIt is prohibited, since the Act requires a beneficiary to be a natural person or the estate
Correct answer: C) The charity receives the proceeds directly, the estate may claim a donation credit, and the designation is revocable
Charitable designations are a planned-giving tool with tax benefits to the estate.
Why the other options are wrong
- ANo consent is needed for a revocable designation.
- BThe charity receives the proceeds directly.
- DNaming a charity as beneficiary is permitted.
Exam tip
Charity beneficiary: direct payment, estate donation credit.
Common mistake
Naming a charity with an inexact legal name.
What this tests
CISRO competency component 1.5 — 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.