LLQP Ethics & Professional Practice · Component 1.4 · 60% of the exam
The 'reinstatement' provision in the contract:
- ADoes not exist in the contract, since reinstatement is governed entirely by the Insurance Act
- BIs more restrictive than the Act allows, since insurers use the contract to shorten the statutory period
- CApplies only to term policies, since permanent policies are kept in force by the automatic premium loan
- Sets out the time limit, evidence and payment of arrears, and cannot be less favourable than the statute
Correct answer: D) Sets out the time limit, evidence and payment of arrears, and cannot be less favourable than the statute
Contract reinstatement terms mirror or improve on the statute.
Why the other options are wrong
- AIt is a standard provision.
- BIt cannot be less favourable than the Act.
- CIt applies to all life policies.
Exam tip
Reinstatement clause ≥ statutory minimum.
Common mistake
Assuming reinstatement is always available regardless of time elapsed.
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.