LLQP Life Insurance · Component 1.2 · 35% of the exam
A review finds that a client's spouse is the irrevocable beneficiary of his policy and the couple are separating. The client wants to change the beneficiary. The agent explains that:
- AThe insurer will change it on request, since the client is the owner and the insurer takes instructions from the owner of the contract alone
- BHe may change it freely, since separation ends the spouse's interest in the policy under family law
- He cannot change the designation, assign or access values without the spouse's written consent
- DThe designation expires on separation, so the proceeds will go to his estate unless he names someone new
Correct answer: C) He cannot change the designation, assign or access values without the spouse's written consent
Irrevocable beneficiaries have vested rights that survive separation. Changes require consent or a court order, often addressed in the separation agreement. The agent should not attempt to process a change without it.
Why the other options are wrong
- AThe insurer will not act without the beneficiary's consent.
- BIrrevocable designations cannot be changed unilaterally.
- DSeparation does not affect an irrevocable designation.
Exam tip
Irrevocable = the beneficiary's consent for any change. Refer separation-related changes to the parties' lawyers.
Common mistake
Submitting a beneficiary change on a policy with an irrevocable beneficiary.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Life Insurance module. Written against the published curriculum.
More from component 1
- A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:
- A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:
- A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:
- A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?
- Which of the following is a capital expense arising at death, rather than an ongoing income need?
- A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.