LLQP Life Insurance · Component 2.1 · 30% of the exam
A client stopping premiums on a whole life policy chooses between reduced paid-up insurance and extended term insurance. Reduced paid-up:
- Areturns the cash value to the client and terminates the contract immediately
- Bconverts the policy into a term contract renewable to the insured's age one hundred
- Ckeeps the full face amount for a shorter period determined by the cash value
- provides a smaller permanent death benefit with no further premiums payable
Correct answer: D) provides a smaller permanent death benefit with no further premiums payable
Reduced paid-up uses the cash value as a single premium for a lower permanent amount that lasts for life. Extended term keeps the original amount but only for a limited period, which the option is designed to make clear.
Why the other options are wrong
- ASurrender is a separate choice and ends the coverage.
- BNo renewable term contract results from this election.
- CThat describes the extended term option instead.
Exam tip
Reduced paid-up equals less coverage forever; extended term equals full coverage briefly.
Common mistake
Confusing the two non-forfeiture options when a client stops paying.
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.