LLQP Life Insurance · Component 1.2 · 35% of the exam
A client's existing policy has a waiver of premium currently in claim because he is disabled. In the review the agent must recognize that:
- Athe policy has lapsed because no premiums are being received by the insurer
- the coverage continues at no cost to him, and replacing it would be seriously harmful
- Cthe waiver ends automatically after one year regardless of his condition
- Dthe death benefit is reduced in proportion to the premiums that have been waived
Correct answer: B) the coverage continues at no cost to him, and replacing it would be seriously harmful
A policy in waiver provides coverage at no cost while the disability continues, and the client is almost certainly uninsurable. Any suggestion of replacement would be indefensible in these circumstances.
Why the other options are wrong
- AThe waiver keeps the contract in force without premium payment.
- CThe waiver continues while the disability meets the contract's definition.
- DWaived premiums do not reduce the death benefit.
Exam tip
A policy in waiver is free coverage for an uninsurable client; never replace it.
Common mistake
Treating a policy with no premium being paid as inactive.
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.