LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
The 'incontestability' clause in the contract:
- Restates the statutory rule of no contest after two years except fraud, and may be more generous but not less
- BIs optional, so an insurer may omit it and contest the policy at any time for any misrepresentation
- CAlways applies to riders in a different way, since riders are separate contracts with their own rules under the Act
- DCan shorten the statutory period to one year if the owner agrees in exchange for a lower premium
Correct answer: A) Restates the statutory rule of no contest after two years except fraud, and may be more generous but not less
The lifetime qualifier matters: a death within two years remains contestable even if a claim is made later.
Why the other options are wrong
- BThe incontestability clause is mandatory under the Act.
- CRiders may have their own clocks, but the base rule is statutory.
- DIt cannot be less than the statute.
Exam tip
Two years during the lifetime of the life insured.
Common mistake
Believing a death at 23 months becomes incontestable if the claim is filed at 25 months.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.