LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
The insurer must provide the owner with 'notice of lapse' in the sense that:
- ANotice is optional, since the owner is responsible for knowing when premiums fall due under the contract
- BNotice goes to the beneficiary only, since the beneficiary is the person who loses out if the policy lapses
- CNo notice is required, since the grace period itself is the statutory protection against inadvertent lapse and the owner knows the due date
- The insurer must notify the owner, and in some provinces an assignee, before terminating, honouring the grace period
Correct answer: D) The insurer must notify the owner, and in some provinces an assignee, before terminating, honouring the grace period
Notice requirements protect against unknowing lapse. Some provinces allow a third-party notice designation.
Why the other options are wrong
- ALapse notice is a requirement, not a courtesy.
- BThe owner is notified.
- CNotice of lapse is required, not optional.
Exam tip
Lapse requires notice and the grace period.
Common mistake
Not updating the owner's address, so notices are missed.
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.