LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
The 'premium' provisions of a life policy set out:
- ANothing binding, since the insurer may vary the premium at any time on notice under the general conditions
- The amount, frequency and due dates, the modes available, the grace period, and how premiums may change
- CThe beneficiary and the shares in which the proceeds will be paid, since premiums are collected on their behalf
- DThe insurer's profit margin on the policy, which the regulator requires to be disclosed to the owner
Correct answer: B) The amount, frequency and due dates, the modes available, the grace period, and how premiums may change
Premium terms determine the owner's obligations and the policy's cost stability (guaranteed vs adjustable).
Why the other options are wrong
- APremium provisions are binding contract terms.
- CBeneficiary provisions are separate.
- DProfit is not disclosed as a term.
Exam tip
Premium terms: amount, mode, grace, adjustability.
Common mistake
Not explaining that a universal life policy's cost of insurance may not be guaranteed.
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
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