LLQP Life Insurance · Component 1.2 · 35% of the exam
A client's existing policy has a settlement option already elected directing proceeds as monthly income. The agent should:
- confirm the election still matches the client's intentions for that beneficiary
- Bcancel it immediately, because lump sum payment is always in a family's interest
- Cignore it, since settlement options are only chosen by beneficiaries after a death
- Dtell the client that an elected settlement option can never be altered afterward
Correct answer: A) confirm the election still matches the client's intentions for that beneficiary
An election made years ago may no longer suit, particularly if the beneficiary's circumstances have changed. The review should check that the arrangement still reflects what the client wants to happen.
Why the other options are wrong
- BAn income stream is often exactly right for a vulnerable beneficiary.
- CA policyholder can elect a settlement option in advance.
- DA revocable election can generally be changed by the owner.
Exam tip
Review elected settlement options as you would review a designation.
Common mistake
Overlooking a settlement option elected years earlier.
What this tests
CISRO competency component 1.2 — 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.