LLQP Life Insurance · Component 1.2 · 35% of the exam
A client's existing term policy is convertible to age 65. She is 63. What should the review flag?
- AThat conversion will lower her premium, since permanent insurance is priced on the original issue age
- BThat the policy must be converted immediately, since a client over 60 cannot wait until the last year
- CNothing in particular, since conversion happens automatically at the end of the term if the client is still paying
- That the conversion window closes in two years, after which permanent coverage requires new evidence
Correct answer: D) That the conversion window closes in two years, after which permanent coverage requires new evidence
Conversion privileges expire at a stated age. If the client will need permanent coverage — for estate taxes, for example — the decision has to be made before the deadline, because afterwards her health will be underwritten. The review exists to catch such deadlines.
Why the other options are wrong
- AConversion at attained age raises the premium.
- BImmediate conversion is one option, not a requirement.
- CConversion is never automatic; the client must elect it.
Exam tip
Conversion deadlines are the most common time bomb in an existing-coverage review. Flag any within the next few years.
Common mistake
Missing a conversion deadline for a client whose need turned out to be permanent.
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.