LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
'Undue influence' or 'duress' in the formation of an insurance contract:
- AStrengthens the contract, since a decision made under pressure shows the party was serious about the transaction
- Can make the contract, a designation or an assignment voidable if a party was pressured or manipulated
- CApplies only to insurers, which may not pressure applicants into accepting a counter-offer on different terms
- DIs irrelevant to insurance, since the Insurance Act's statutory provisions replace the general law of contract
Correct answer: B) Can make the contract, a designation or an assignment voidable if a party was pressured or manipulated
Vulnerable client protection is an ethics theme; contracts obtained through undue influence can be set aside.
Why the other options are wrong
- AIt undermines consent.
- CIt can involve family members or agents.
- DUndue influence affects the validity of the contract.
Exam tip
Ensure vulnerable clients decide freely; document independent decision-making.
Common mistake
Taking a beneficiary change from an elderly client under a relative's evident pressure.
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.