LLQP Life Insurance · Component 2.1 · 30% of the exam
'Optional' or 'voluntary' group life insurance differs from basic group life in that:
- The member elects it and pays for it, and evidence of insurability is usually required
- BIt has no maximum, since the member is paying the full cost and may choose whatever amount suits the family
- CIt is paid entirely by the employer, as an additional benefit for members who have completed a service period
- DIt cannot be converted to an individual policy on termination, unlike the basic coverage the employer provides
Correct answer: A) The member elects it and pays for it, and evidence of insurability is usually required
Basic group life is generally employer-paid and issued without evidence up to the non-evidence maximum. Optional life is chosen and paid by the member, and because it is selected by the individual, insurers usually underwrite it to control anti-selection.
Why the other options are wrong
- BOptional life has maximums and usually requires evidence above a threshold.
- COptional life is member-paid.
- DConversion rules depend on the plan; the distinguishing feature is member election and payment.
Exam tip
Optional/voluntary group life: elected and paid by the member, usually underwritten, because self-selection invites anti-selection.
Common mistake
Assuming optional life is issued without evidence like basic coverage.
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.