LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
The 'grace period' under a life insurance contract:
- AApplies only to the first premium, since renewal premiums must be paid on the due date or coverage ends on that day
- BAllows the owner to keep the policy without paying, since the missed premium is forgiven
- Keeps the policy in force for a statutory minimum after the due date; a death within it is paid less the premium
- DEnds coverage immediately on the due date, with the grace period applying only to reinstatement
Correct answer: C) Keeps the policy in force for a statutory minimum after the due date; a death within it is paid less the premium
The grace period is a statutory protection against inadvertent lapse.
Why the other options are wrong
- AIt applies to renewal premiums.
- BThe premium remains owed.
- DCoverage continues during the grace period.
Exam tip
Grace period: 30 days (minimum), coverage continues, premium deducted from a claim.
Common mistake
Telling a client coverage ends on the premium due date.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.