LLQP Ethics & Professional Practice · Component 1.6 · 60% of the exam
When a life insured dies within the two-year contestability period, the insurer typically:
- ADenies the claim automatically, since a death within two years of issue is presumed to involve non-disclosure
- BPays immediately without review, since the Act requires payment within 30 days of receiving proof of death
- Investigates by comparing medical records with the application before paying, denying or rescinding
- DPays double the face amount, since the early death shows the insurer priced the risk too favourably
Correct answer: C) Investigates by comparing medical records with the application before paying, denying or rescinding
Early-death claims are investigated as a matter of course. Explaining this reduces distress.
Why the other options are wrong
- ADenial requires grounds; it is never automatic.
- BInvestigation is standard for contestable claims.
- DNothing about an early death doubles the benefit.
Exam tip
Death within 2 years → contestable claim investigation.
Common mistake
Telling the family the claim will be paid within days when a contestable investigation is likely.
What this tests
CISRO competency component 1.6 — 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.