LLQP Life Insurance · Component 4.1 · 10% of the exam
A client's monthly premium withdrawal is returned by the bank for insufficient funds. The agent should:
- Apay the premium personally and recover the amount from the client later
- contact the client promptly so the payment can be made within the grace period
- Cwait for the insurer to send a lapse notice before contacting the client about it
- Dassume the client intended to cancel and close the file accordingly
Correct answer: B) contact the client promptly so the payment can be made within the grace period
A returned payment starts the clock toward a lapse. Prompt contact usually resolves it within the grace period, avoiding the evidence of insurability that reinstatement would later require.
Why the other options are wrong
- APaying a client's premium personally is an inducement and a conflict.
- CWaiting wastes grace period days the client needs.
- DA returned payment is usually an oversight rather than an instruction.
Exam tip
Act inside the grace period; reinstatement afterward needs evidence.
Common mistake
Treating a returned payment as the insurer's problem to chase.
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.