LLQP Life Insurance · Component 4.1 · 10% of the exam
A client is unable to pay premiums temporarily on a whole life policy. Before letting it lapse, the agent should suggest:
- ACancelling the beneficiary designation, so the insurer will reduce the premium to reflect the lower risk it is now carrying
- BSelling the policy to the agent, who can keep it in force and pay the client a fair price for the cash value
- Options such as the automatic premium loan, a policy loan, a change of mode, or non-forfeiture
- DImmediate surrender for the cash value, so the client receives the money before the policy lapses and the value is lost
Correct answer: C) Options such as the automatic premium loan, a policy loan, a change of mode, or non-forfeiture
Cash-value policies have built-in bridges over short-term cash problems. Lapse is the worst outcome because it may cost insurability. The agent's service role is to present the alternatives.
Why the other options are wrong
- ABeneficiary changes do not solve a premium problem.
- BBuying a client's policy is a gross conflict of interest.
- DSurrender ends coverage and may trigger tax.
Exam tip
Cash-value policies have lapse alternatives: APL, loans, non-forfeiture options.
Common mistake
Letting a whole life policy lapse without using its own values to save it.
What this tests
CISRO competency component 4.1 — 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'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:
- The primary purpose of a periodic policy review is to:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.