LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
The insurer's protection when paying a beneficiary is that:
- AIt must pay twice if it pays the wrong person, since the insurer is responsible for verifying every designation
- Payment in good faith to the beneficiary in its records discharges it, even if an unfiled designation exists
- CIt must investigate every possible claimant before paying, since payment to the wrong person is never discharged
- DIt can refuse to pay until the claimants agree among themselves, since the insurer has no duty to decide
Correct answer: B) Payment in good faith to the beneficiary in its records discharges it, even if an unfiled designation exists
Filing designations with the insurer is essential because the insurer relies on its records.
Why the other options are wrong
- AGood-faith payment discharges the insurer.
- CThe insurer relies on its records.
- DThe insurer must pay the person entitled or into court.
Exam tip
Unfiled designations do not bind the insurer; file everything.
Common mistake
Keeping a beneficiary change in the agent's file only.
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.