LLQP Life Insurance · Component 2.2 · 30% of the exam
A client is choosing between adding a term rider to his permanent policy and buying a separate term policy. Which consideration favours the separate policy?
- Independence: the separate policy survives if the base policy is surrendered or lapses, on its own terms
- BIt is always cheaper, since a separate policy is priced without the insurer's rider administration costs
- CIt requires no underwriting, since the client has already been underwritten for the base policy
- DIt has a longer contestability period, which gives the insurer more time to review the application
Correct answer: A) Independence: the separate policy survives if the base policy is surrendered or lapses, on its own terms
Riders live and die with the base contract. A rider is convenient and often cheaper; a stand-alone policy is more flexible. The rider analysis in the curriculum weighs exactly these trade-offs.
Why the other options are wrong
- BA separate policy is not always cheaper; riders often cost less.
- CA separate policy is underwritten like any policy.
- DContestability periods are the same two years.
Exam tip
Rider = cheaper and convenient but tied to the base policy. Separate policy = independent, with its own renewal and conversion rights.
Common mistake
Ignoring that a rider disappears if the base policy is surrendered.
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.