LLQP Life Insurance · Component 2.1 · 30% of the exam
In group life insurance, who is the policyholder?
- AThe insurer, which holds the master contract on behalf of the members and issues certificates to each of them
- BEach employee, who holds an individual contract with the insurer for the coverage shown on the certificate
- The plan sponsor, such as the employer or association, which holds the master contract
- DThe beneficiary named by each member, who is the only person with an enforceable interest in the plan
Correct answer: C) The plan sponsor, such as the employer or association, which holds the master contract
The sponsor holds the master contract and sets the plan terms; members receive certificates describing their coverage. That structure is why the sponsor can amend or terminate the plan, and why members' rights are those in the certificate.
Why the other options are wrong
- AThe insurer issues the contract; it is not the policyholder.
- BEmployees are members holding certificates.
- DThe beneficiary receives the benefit; it does not hold the contract.
Exam tip
Sponsor = policyholder of the master contract; member = certificate holder. This explains who controls the plan.
Common mistake
Thinking each employee has their own contract with the insurer.
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.