LLQP Life Insurance · Component 2.1 · 30% of the exam
A group life plan reduces coverage by half at age 65. A 64-year-old member relying on it for estate needs should be advised that:
- AThe reduction does not apply if she keeps working past 65, since the plan reduces coverage only at retirement and not at a stated age
- Her group coverage will halve next year; if her need is permanent she should arrange individual coverage while insurable
- CGroup coverage cannot be reduced by age under human rights legislation, so the plan provision is unenforceable
- DThe insurer will waive the reduction on request, since she has been a member of the plan for many years
Correct answer: B) Her group coverage will halve next year; if her need is permanent she should arrange individual coverage while insurable
Age-based reductions and terminations are standard group provisions. Matching them against the client's needs is the agent's job. Individual coverage put in place before the reduction avoids a gap and possibly a decline later.
Why the other options are wrong
- AAge-based reductions apply whether or not the member keeps working.
- CAge-based reductions are standard and lawful in group plans.
- DInsurers do not waive plan provisions on request.
Exam tip
Group reductions at 65 or 70 are routine. Replace the coverage while the client is still insurable if the need is permanent.
Common mistake
Learning of the reduction only when the client turns 65.
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.