LLQP Life Insurance · Component 3.1 · 25% of the exam
A 'rated' or substandard policy is one where:
- AThe applicant was declined but may reapply after a stated period once the condition has stabilized and the evidence has been updated
- The insurer accepts the risk but charges an extra premium or adds an exclusion because the risk is above standard
- CThe policy has no death benefit until the extra premium has been paid for a stated number of years
- DThe premium is lower than standard, since the applicant has been rated as a preferred risk
Correct answer: B) The insurer accepts the risk but charges an extra premium or adds an exclusion because the risk is above standard
Ratings are expressed as a table rating (a percentage above standard) or a flat extra per thousand of coverage, sometimes temporary. The agent must explain the rating to the client, who may accept, appeal with more evidence, or decline the offer.
Why the other options are wrong
- AA rated policy is issued; a decline is not.
- CRated policies pay the full death benefit.
- DRated premiums are higher than standard, never lower.
Exam tip
Rating = extra premium (table rating or flat extra) or an exclusion. Explain it, and the option to appeal with more evidence.
Common mistake
Delivering a rated policy without explaining the rating to the client.
What this tests
CISRO competency component 3.1 — 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.