LLQP Life Insurance · Component 2.1 · 30% of the exam
A 'renewable and convertible' 20-year term policy gives the policyholder:
- AThe right to lower premiums at each renewal, since the insurer has recovered its issue costs during the first term of the contract
- The right to renew without evidence at a higher premium and to convert before a stated age
- CA guaranteed cash value at year 20, which the client can take instead of renewing the coverage
- DCoverage that continues automatically at the same premium for further 20-year terms until the client cancels
Correct answer: B) The right to renew without evidence at a higher premium and to convert before a stated age
Renewability and convertibility are insurability protections. Renewal keeps term coverage going at the new age's rate; conversion moves to permanent coverage at attained age without underwriting. Neither preserves the original premium.
Why the other options are wrong
- ARenewal premiums are higher, not lower.
- CTerm policies have no cash value.
- DRenewal is at a new premium, and in many policies must be elected.
Exam tip
R&C term: renew (higher premium, same coverage) or convert (permanent, attained age) — both without evidence.
Common mistake
Telling a client the premium will not change at renewal.
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.