LLQP Life Insurance · Component 2.1 · 30% of the exam
A joint first-to-die policy on a married couple:
- APays on each death, so the family receives two benefits over the life of the contract
- BPays only when both have died, which is why it is used to fund estate taxes on the second death
- Pays a single death benefit when the first of the two insureds dies, and then typically ends
- DCannot name a beneficiary, since the proceeds are always paid to the surviving insured
Correct answer: C) Pays a single death benefit when the first of the two insureds dies, and then typically ends
Joint first-to-die is used where the survivor needs money at the first death — a mortgage, income replacement. Joint last-to-die pays at the second death and is the tool for estate taxes deferred by a spousal rollover. Many first-to-die contracts give the survivor an option to buy single-life coverage.
Why the other options are wrong
- AFirst-to-die pays once, on the first death.
- BPaying at the second death is joint last-to-die.
- DA beneficiary can be named on joint policies.
Exam tip
First-to-die: money at the first death (mortgage, income). Last-to-die: money at the second death (deferred estate taxes).
Common mistake
Using first-to-die for a tax liability that will not arise until the second death.
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.