LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
The statutory requirement that a contract contain the 'name of the insurer, the insured, the beneficiary, the amount, the premium, the term, and the conditions' ensures that:
- ANothing in particular, since the required contents are a formality the regulator checks and the insured never reads before signing
- BThe agent is paid the correct commission, since the premium and term shown on the policy determine the calculation
- The document is complete and the insured can identify the essential terms; omissions are read in the insured's favour
- DThe policy is void if any required item is missing, so the insured should check the document carefully at delivery
Correct answer: C) The document is complete and the insured can identify the essential terms; omissions are read in the insured's favour
Required content is a formation safeguard. Ambiguity is construed against the insurer.
Why the other options are wrong
- ARequired contents protect the insured's understanding of the terms.
- BRequired policy contents have nothing to do with the agent's commission.
- DOmissions are cured, not fatal.
Exam tip
Required policy contents protect the insured's understanding.
Common mistake
Ignoring a policy that omits a required term.
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.