LLQP Life Insurance · Component 2.1 · 30% of the exam
A client's ten-year level term policy is reaching the end of its first term and she does not want to pay the renewal rate. Her options are generally to:
- Aconvert the unused portion of the premiums paid into a paid-up policy
- Btransfer the contract to another insurer at the same premium without underwriting
- Crequire the insurer to extend the current premium for a further ten-year period
- renew at the scheduled rate, convert to permanent coverage or let the policy end
Correct answer: D) renew at the scheduled rate, convert to permanent coverage or let the policy end
At the end of a level term the contract sets out the renewal rate, which rises sharply. The conversion right, if still available, allows permanent coverage without evidence, and otherwise the coverage simply ends.
Why the other options are wrong
- ATerm policies build no value that can be converted into paid-up coverage.
- BA transfer to another insurer requires a new application and underwriting.
- CThe insurer is not obliged to extend the expiring premium level.
Exam tip
At term end: renew, convert or lapse, and check the conversion deadline first.
Common mistake
Letting a term policy lapse without checking whether conversion is still open.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.