LLQP Life Insurance · Component 2.2 · 30% of the exam
Asked to explain the difference between a rider and a separate policy, the agent should say that a rider:
- Aprovides exactly the same rights and flexibility as a stand-alone policy would
- Bcan be transferred to another policy whenever the client chooses to move it
- is an addition to an existing contract and depends on that contract continuing
- Dis issued by a different insurer and administered under its own separate contract
Correct answer: C) is an addition to an existing contract and depends on that contract continuing
A rider modifies the contract it is attached to, sharing its administration and its fate. A separate policy stands alone, with its own fee, its own rights and its own ability to be kept or cancelled.
Why the other options are wrong
- AA rider's rights are narrower and depend on the base policy.
- BRiders cannot be moved between contracts.
- DA rider forms part of the same insurer's contract.
Exam tip
A rider is part of a contract; a policy is a contract.
Common mistake
Describing a rider as though it were an independent policy.
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.