LLQP Life Insurance · Component 1.2 · 35% of the exam
A review shows a client's existing policy names her nine-year-old son as sole beneficiary. The agent should:
- Achange the designation to the estate so the executor can handle the money
- Bleave it unchanged, since a parent may always name a child as beneficiary
- Cadvise that the insurer will hold the money until the child turns eighteen without cost
- raise the need for a trustee, since a minor cannot give a valid receipt for proceeds
Correct answer: D) raise the need for a trustee, since a minor cannot give a valid receipt for proceeds
Without a trustee named in the designation, proceeds for a minor may be paid into court and administered until the age of majority. Naming a trustee, or using a settlement option, avoids the delay and cost.
Why the other options are wrong
- AAn estate designation loses probate bypass and creditor protection.
- BNaming a minor is permitted but leaves the receipt problem unsolved.
- CCourt administration involves delay, cost and loss of control.
Exam tip
A minor beneficiary always needs a trustee named in the designation.
Common mistake
Leaving a minor named alone because the designation looks valid.
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.