LLQP Life Insurance · Component 3.3 · 25% of the exam
A client wants proceeds held for her children under a trustee. At implementation the agent should:
- Aname the agent as trustee, since the agent will be administering the policy
- record the trustee in the designation and recommend legal advice on the terms
- Cnote the intention in the file and arrange the trustee after the policy is issued
- Dname the estate as beneficiary so the executor can act as trustee later
Correct answer: B) record the trustee in the designation and recommend legal advice on the terms
The trustee must be named in the designation for the arrangement to work. Where the client wants conditions on how the money is used, a lawyer should draft the terms rather than the agent.
Why the other options are wrong
- AAn agent acting as trustee is a serious conflict of interest.
- CA file note has no effect if the client dies before the change is made.
- DAn estate designation loses probate bypass and creditor protection.
Exam tip
The trustee goes in the designation, and a lawyer drafts the terms.
Common mistake
Leaving a trustee arrangement to be sorted out after issue.
What this tests
CISRO competency component 3.3 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Life Insurance module. Written against the published curriculum.
More from component 3
- At policy delivery, the agent should obtain:
- The effective date of a life insurance policy is generally:
- A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:
- A pre-authorized debit form is part of implementation because:
- During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:
- Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.