LLQP Ethics & Professional Practice · Component 1.5 · 60% of the exam
When the beneficiary is the 'estate' of the life insured, the proceeds:
- AAre protected from creditors, since the estate holds them in trust for the heirs named in the will
- Form part of the estate, subject to probate, delays, creditors and the will, losing the named-beneficiary advantages
- CPass to the spouse automatically, since the Act treats the estate designation as a designation of the surviving spouse
- DAre forfeited to the insurer if the estate has not been probated within the limitation period
Correct answer: B) Form part of the estate, subject to probate, delays, creditors and the will, losing the named-beneficiary advantages
Estate designation is the least advantageous choice in most cases.
Why the other options are wrong
- AEstate proceeds are exposed to creditors.
- CThe will governs distribution when the estate is beneficiary.
- DProceeds payable to the estate are never forfeited.
Exam tip
Estate beneficiary = probate, delay, creditor exposure.
Common mistake
Leaving the beneficiary blank.
What this tests
CISRO competency component 1.5 — 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.