LLQP Life Insurance · Component 2.1 · 30% of the exam
How is a group typically defined for group life insurance purposes?
- A group formed for a purpose other than obtaining insurance, such as employees or association members
- BA family, including the extended family, provided the members live in the same province
- CA group of at least 500 people, since smaller groups cannot spread the risk sufficiently
- DAny collection of people who want insurance and agree to be covered under one contract, provided there are at least ten of them
Correct answer: A) A group formed for a purpose other than obtaining insurance, such as employees or association members
Group underwriting relies on the group existing for its own reasons (employment, membership) so that insurance is not the reason people join — which controls anti-selection. Small groups are possible; the minimum size varies by insurer.
Why the other options are wrong
- BA family is not a group for group insurance purposes.
- CThere is no 500-member minimum.
- DA group formed only to buy insurance is what group underwriting excludes.
Exam tip
A true group exists for reasons other than insurance — employment, membership — which is what controls anti-selection.
Common mistake
Assuming any collection of people can form a group plan.
What this tests
CISRO competency component 2.1 — 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.