LLQP Life Insurance · Component 1.2 · 35% of the exam
A client's existing policy names her sister as beneficiary from before her marriage. She now has a spouse and children. The review should:
- Flag the outdated designation and, if she wishes, help her update it, considering trustee arrangements for minors
- BLeave it as it is, since designations cannot be changed once the policy has been issued and the sister has been notified
- CChange it to the estate, so the will can distribute the proceeds among the spouse and children in whatever shares she chooses
- DAdd the sister as owner of the policy, so that the sister can change the designation herself when the client dies
Correct answer: A) Flag the outdated designation and, if she wishes, help her update it, considering trustee arrangements for minors
Outdated designations are the most common finding in an existing-coverage review. Revocable designations can be changed by the policyholder at any time; the agent's role is to surface the issue and help implement the client's wishes correctly.
Why the other options are wrong
- BRevocable designations can be changed.
- CNaming the estate forfeits creditor protection and probate avoidance.
- DChanging ownership is unrelated to the beneficiary issue.
Exam tip
Ask about the beneficiary on every policy at every review. Life changes rarely update designations by themselves.
Common mistake
Assuming marriage or the birth of children changed the designation automatically.
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.