LLQP Life Insurance · Component 4.1 · 10% of the exam
A client can no longer afford the premiums on her whole life policy. Before she surrenders it the agent should explain:
- Athat the policy can be sold to another individual for its full face amount
- the non-forfeiture options, including reduced paid-up and extended term coverage
- Cthat the insurer will suspend the premiums indefinitely on request and at no cost at all
- Dthat surrender is the only option once premiums become unaffordable
Correct answer: B) the non-forfeiture options, including reduced paid-up and extended term coverage
Non-forfeiture options use the accumulated value to keep some coverage rather than ending it. Reducing the face amount or using the automatic premium loan may also bridge a temporary difficulty.
Why the other options are wrong
- ANo ordinary market exists to sell a policy at its face amount.
- CPremiums are not suspended indefinitely without a waiver claim.
- DSeveral alternatives to surrender exist and should be presented.
Exam tip
Always present the non-forfeiture options before a surrender.
Common mistake
Processing a surrender without exploring the alternatives.
What this tests
CISRO competency component 4.1 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Life Insurance module. Written against the published curriculum.
More from component 4
- After a policy is reinstated, the contestability period:
- A revocable beneficiary designation is changed by:
- A client asks the agent to hold the beneficiary change form 'until next week' and dies in the meantime. The consequence is that:
- A client wants to reduce the face amount of her policy because her needs have fallen. The agent should note that:
- A client is unable to pay premiums temporarily on a whole life policy. Before letting it lapse, the agent should suggest:
- A client's term policy is being replaced with a new one from another insurer because it is cheaper and he remains healthy. To protect the client, the agent should ensure that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.