LLQP Life Insurance · Component 3.3 · 25% of the exam
A pre-authorized debit form is part of implementation because:
- It establishes the ongoing premium payment method, reducing the risk of lapse through missed payments
- BIt replaces the application as the client's authority for the insurer to issue the policy and collect the first premium
- CIt is required for underwriting, since the insurer assesses the client's banking history as part of financial evidence
- DIt sets the beneficiary, since the account holder named on the form is treated as the person entitled to the proceeds
Correct answer: A) It establishes the ongoing premium payment method, reducing the risk of lapse through missed payments
Most lapses are administrative — a missed payment, a closed account. Automatic payment is the simplest lapse prevention, and setting it up at implementation is standard practice.
Why the other options are wrong
- BThe PAD form supplements the application.
- CPayment method is not an underwriting factor.
- DBeneficiaries are set on the application or a designation form.
Exam tip
Set up automatic payments at implementation; it prevents most lapses.
Common mistake
Leaving the client to remember annual or monthly cheques.
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:
- 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?
- A client's application shows the beneficiary as 'my wife' without a name. The best implementation practice is to:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.