LLQP Life Insurance · Component 2.2 · 30% of the exam
An agent notes that the riders available on a term policy are fewer than on a permanent contract. The main reason is that:
- Aterm policyholders are not permitted to add supplementary benefits of any kind
- Briders on term policies must be approved individually by the regulator
- Cprovincial legislation restricts the riders that may be attached to term insurance
- term contracts are shorter and simpler, so insurers offer a narrower range
Correct answer: D) term contracts are shorter and simpler, so insurers offer a narrower range
Permanent contracts run for life and carry values, which supports a wider range of benefits. Term products are built around a defined period, so waiver, accidental death and child coverage are the usual additions.
Why the other options are wrong
- ATerm policies commonly carry several riders.
- BIndividual regulatory approval of riders is not required.
- CThe difference is a product design choice rather than a legal restriction.
Exam tip
Permanent contracts support a wider range of riders than term products.
Common mistake
Promising a term client riders that only permanent contracts offer.
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.