LLQP Life Insurance · Component 2.2 · 30% of the exam
A client compares a paid-up additions rider with simply selecting the paid-up additions dividend option. The rider:
- Ais available only on non-participating policies that pay no dividends
- Breplaces the dividend entitlement with a fixed rate of interest instead
- allows additional deposits beyond the dividends, buying more paid-up coverage
- Dproduces exactly the same result, so the choice between them is immaterial
Correct answer: C) allows additional deposits beyond the dividends, buying more paid-up coverage
The dividend option applies whatever dividends are declared, while the rider lets the client contribute additional amounts within the exempt limits. That accelerates the growth of both death benefit and cash value.
Why the other options are wrong
- AThe rider belongs to participating policies.
- BDividend entitlement continues alongside the rider.
- DThe rider permits deposits the dividend option does not.
Exam tip
The rider adds deposits; the dividend option only directs dividends.
Common mistake
Treating the rider and the dividend option as the same thing.
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.