LLQP Life Insurance · Component 2.1 · 30% of the exam
A joint last-to-die policy is generally cheaper than two single-life policies for the same total coverage because:
- AIt is term insurance, so the premium reflects only the mortality cost for the years the couple is likely to live
- BInsurers discount couples, since two policies sold at once cost less to administer than two sold separately
- CIt has no underwriting, so the insurer saves the cost of medical evidence and passes the saving to the client
- The benefit is paid only once, at the second death, which on average is later than either single death
Correct answer: D) The benefit is paid only once, at the second death, which on average is later than either single death
The insurer's expected payment date is the later of two lifetimes, so the premium reflects a longer expected duration. That makes last-to-die efficient for second-death estate needs.
Why the other options are wrong
- ALast-to-die is usually permanent coverage.
- BThe saving is actuarial, not a marketing discount.
- CBoth lives are underwritten.
Exam tip
Last-to-die is priced on the joint survival of two lives — cheaper, and paid once at the second death.
Common mistake
Using last-to-die where money is needed at the first 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.