LLQP Life Insurance · Component 2.1 · 30% of the exam
On the termination of a group plan by the sponsor, members' life coverage:
- ABecomes universal life on each member, with the employer's past contributions forming the initial account value
- BContinues for life at the group rate, since the insurer's obligation to the members survives the sponsor's decision
- Ends, subject to any conversion privilege allowing individual coverage within a limited period without evidence
- DIs transferred to the members' own names automatically, with each member billed directly by the insurer
Correct answer: C) Ends, subject to any conversion privilege allowing individual coverage within a limited period without evidence
Termination of the master contract ends members' coverage. Conversion rights, where they apply, give a short window to obtain individual coverage without underwriting. The agent should alert affected clients immediately.
Why the other options are wrong
- AThere is no automatic conversion to any product.
- BGroup coverage ends with the plan.
- DNothing transfers automatically; conversion must be applied for.
Exam tip
Plan termination = conversion window. It is short; act fast.
Common mistake
Assuming members keep coverage after the sponsor ends the 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.