LLQP Life Insurance · Component 4.1 · 10% of the exam
A client's divorce settlement requires him to maintain life insurance for his children with his former spouse as trustee. The agent should:
- Help implement the designation as required, and note that changing it later without agreement could breach the order
- BCancel the policy and replace it with one that names the children directly, since a trustee designation is unusual and hard to administer
- CIgnore the settlement, since beneficiary designations are governed by the Insurance Act rather than by family law
- DName the client's new partner instead, since the client is entitled to designate whomever he wishes
Correct answer: A) Help implement the designation as required, and note that changing it later without agreement could breach the order
Court orders and separation agreements commonly require insurance to secure support. The designation must follow the agreement — sometimes made irrevocable for that reason — and the agent should not facilitate changes that would breach it.
Why the other options are wrong
- BCancelling would breach the agreement.
- CIgnoring a court-ordered requirement exposes the client to breach.
- DNaming a different beneficiary would breach the agreement.
Exam tip
Insurance required by a separation agreement must be set up as the agreement says — often with an irrevocable designation — and not changed unilaterally.
Common mistake
Changing a beneficiary that a court order fixed.
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 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.