LLQP Life Insurance · Component 1.2 · 35% of the exam
An existing policy has a hazardous-sports exclusion. For a client who has since taken up skydiving, the review should conclude that:
- AThe policy covers skydiving deaths, since the exclusion was added before the hobby began and cannot apply retroactively
- A death caused by skydiving would not be paid under this policy, so the gap must be addressed
- CThe exclusion is void after two years under the incontestability rule, so the policy now covers all causes
- DThe insurer must pay double, since the exclusion was not explained when the hobby was taken up
Correct answer: B) A death caused by skydiving would not be paid under this policy, so the gap must be addressed
Exclusions and limitations in an existing contract define what it will not pay. Where a client's circumstances have changed, an exclusion that was harmless can become a real gap. Options include asking the insurer to remove it (with underwriting) or arranging other coverage.
Why the other options are wrong
- AAn exclusion applies to the cause of death whenever it occurs.
- CExclusions do not expire with the contestability period.
- DExclusions reduce what is paid; they never increase it.
Exam tip
Read the existing policy's exclusions against the client's current life, not the life they had when it was issued.
Common mistake
Assuming an old exclusion no longer applies because the client's circumstances changed.
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.