LLQP Life Insurance · Component 4.2 · 10% of the exam
A client elected a settlement option paying his beneficiary a monthly income. At the claim the beneficiary:
- Amay override the election entirely and take the whole of the proceeds as a single lump sum
- Breceives nothing until the option has been approved by the deceased's executor
- Cmust apply to a court before any payments under the option can begin
- receives the income as the contract holder directed, according to the option elected
Correct answer: D) receives the income as the contract holder directed, according to the option elected
An election made by the owner binds the payment arrangement. It is used where a lump sum would be unsuitable, and any interest included in the payments is taxable to the recipient.
Why the other options are wrong
- AAn election made by the owner is not overridden by the beneficiary.
- BAn executor has no role where proceeds go to a named beneficiary.
- CNo court approval is needed for a contractual settlement option.
Exam tip
An owner's settlement election governs how the beneficiary is paid.
Common mistake
Telling a beneficiary they can always choose a lump sum.
What this tests
CISRO competency component 4.2 — 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.