LLQP Life Insurance · Component 1.1 · 35% of the exam
A client in a blended family has children from a previous relationship and a new spouse. Which needs-analysis issue is most specific to this situation?
- ABlended families cannot buy joint policies, so each spouse must be insured under a separate contract
- BPremiums are higher for blended families, since insurers price the added complexity of the household
- CThe client has no insurable interest in the new spouse, so only the children can be insured or named
- Ensuring the intended beneficiaries are named, since proceeds left to the estate could be contested or omit the children
Correct answer: D) Ensuring the intended beneficiaries are named, since proceeds left to the estate could be contested or omit the children
In a blended family, who receives the proceeds matters as much as how much. Naming beneficiaries directly (for example a trust for the children and a separate amount for the spouse) avoids the proceeds falling into the estate, where a will or intestacy rules may not reflect the client's intentions.
Why the other options are wrong
- AThere is no rule against joint policies for blended families.
- BPremiums are set by the insured's age, health and lifestyle, not family structure.
- CSpouses have insurable interest in each other; a second marriage does not change that.
Exam tip
In blended families the beneficiary designation is the planning tool: name people (or trusts) directly rather than leaving proceeds to the estate.
Common mistake
Assuming a will alone will direct insurance proceeds to the intended children.
What this tests
CISRO competency component 1.1 — Assess the client's needs and situation — which is weighted at 35% of the Life Insurance module. Written against the published curriculum.
More from component 1
- A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:
- A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:
- A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:
- A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?
- Which of the following is a capital expense arising at death, rather than an ongoing income need?
- A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.