LLQP Life Insurance · Component 2.2 · 30% of the exam
A client cancels a rider halfway through the policy year. He should expect that:
- the coverage ends and future premiums are reduced, with no refund of past cost
- Ball rider premiums paid since the policy was issued will be refunded to him
- Cthe rider premiums are converted into additional coverage on the base policy
- Dthe base policy is cancelled at the same time as the rider is removed
Correct answer: A) the coverage ends and future premiums are reduced, with no refund of past cost
Rider premiums pay for coverage already provided, so nothing is returned. Removal should be considered carefully, since reinstating a rider generally requires fresh evidence of insurability.
Why the other options are wrong
- BPast premiums bought coverage that was in force and are not refunded.
- CRider premiums are not converted into other coverage.
- DThe base policy continues when a rider is removed.
Exam tip
Removing a rider is easy; putting it back needs new evidence.
Common mistake
Cancelling a rider to save premium without considering reinstatement.
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.