LLQP Life Insurance · Component 4.2 · 10% of the exam
The insured and the primary beneficiary die in the same accident and it cannot be determined who died first. Under the usual common-law rule for life insurance:
- The beneficiary is presumed to have predeceased, so proceeds go to the contingent or the estate
- BThe proceeds are split equally between the two estates, since neither person can be shown to have survived the other in the accident
- CThe insurer keeps the proceeds, since no living beneficiary can be identified under the contract
- DThe beneficiary is presumed to have survived, so the proceeds pass to the beneficiary's estate and heirs
Correct answer: A) The beneficiary is presumed to have predeceased, so proceeds go to the contingent or the estate
Provincial insurance acts provide that where the insured and beneficiary die together with no proof of order, the beneficiary is deemed to have died first. Naming a contingent beneficiary prevents the proceeds falling into the estate.
Why the other options are wrong
- BNo splitting rule applies.
- CInsurers never keep proceeds; they pay whoever is entitled.
- DThe presumption is the opposite.
Exam tip
Common disaster: beneficiary deemed to die first → contingent beneficiary or estate. Name a contingent.
Common mistake
Failing to name a contingent beneficiary for a married couple.
What this tests
CISRO competency component 4.2 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Life Insurance module. Written against the published curriculum.
More from component 4
- After a policy is reinstated, the contestability period:
- A revocable beneficiary designation is changed by:
- A client asks the agent to hold the beneficiary change form 'until next week' and dies in the meantime. The consequence is that:
- A client wants to reduce the face amount of her policy because her needs have fallen. The agent should note that:
- A client is unable to pay premiums temporarily on a whole life policy. Before letting it lapse, the agent should suggest:
- A client's term policy is being replaced with a new one from another insurer because it is cheaper and he remains healthy. To protect the client, the agent should ensure that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.