LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
The 'policyowner' of a life insurance contract has the right to:
- ANothing after signing, since the insurer controls the contract once it has been issued and the first premium has been paid
- Change beneficiaries unless irrevocable, assign, surrender, borrow, change options and receive dividends
- COnly pay premiums, since every other right under the contract belongs to the life insured
- DReceive the death benefit, since the owner is the person who paid for the coverage
Correct answer: B) Change beneficiaries unless irrevocable, assign, surrender, borrow, change options and receive dividends
Ownership carries the bundle of contractual rights. The death benefit goes to the beneficiary, not the owner (unless the owner is named).
Why the other options are wrong
- AThe owner has ongoing rights.
- CRights go well beyond paying.
- DThe beneficiary receives the death benefit.
Exam tip
Owner controls the policy: beneficiaries, assignment, surrender, loans.
Common mistake
Letting a beneficiary or life insured (who is not the owner) request changes.
What this tests
CISRO competency component 1.2 — 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.