LLQP Life Insurance · Component 2.2 · 30% of the exam
A terminally ill client draws an advance under the terminal illness benefit on her policy. At her death the beneficiary will receive:
- Adouble the remaining benefit, as compensation for the reduced amount advanced
- Bnothing further, because exercising the benefit terminates the contract
- the death benefit reduced by the amount advanced and any interest charged
- Dthe full death benefit, since the advance is repaid from the client's estate
Correct answer: C) the death benefit reduced by the amount advanced and any interest charged
The benefit advances part of the death benefit early, and the balance is paid on death after deducting the advance and any charge. The client should understand the effect on the family before drawing it.
Why the other options are wrong
- ANo increase applies to the remaining amount.
- BThe remaining coverage continues after a partial advance.
- DThe advance is deducted from the proceeds, not recovered from the estate.
Exam tip
A terminal illness advance reduces what the beneficiary later receives.
Common mistake
Presenting an accelerated benefit as free additional money.
What this tests
CISRO competency component 2.2 — 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.