LLQP Life Insurance · Component 2.2 · 30% of the exam
A business owner asks whether a rider could cover his business partner's life on his own policy. The agent should explain that:
- Ariders may only ever cover a spouse or a dependent child of the insured
- Ba rider on a partner's life is prohibited because insurable interest is absent
- Cthe partner would automatically become the owner of the base policy as well
- some insurers permit a second insured rider on a business life, subject to their rules
Correct answer: D) some insurers permit a second insured rider on a business life, subject to their rules
Availability varies, and a separate policy is often cleaner for a business arrangement because ownership, beneficiary and buy-sell terms can be set independently. The insurer's rules should be checked first.
Why the other options are wrong
- ASecond insured riders are not always limited to family members.
- BA business partner has an insurable interest in the other's life.
- CA rider does not confer ownership of the base contract.
Exam tip
Business arrangements are usually cleaner with separate policies than riders.
Common mistake
Attaching business coverage as a rider on a personal policy.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.