LLQP Life Insurance · Component 4.2 · 10% of the exam
The insured dies 18 months after the policy was issued. The insurer:
- AMust pay immediately without review, since the Act requires payment within thirty days of proof of death
- BPays only the premiums, since a death within the first two years is treated as a return of premium
- May review the application because the death is within contestability, and will pay if the application was accurate
- DAutomatically denies the claim, since deaths within the contestability period are presumed to involve non-disclosure on the application
Correct answer: C) May review the application because the death is within contestability, and will pay if the application was accurate
A death within two years of issue triggers a contestable-claim review. Most such claims are paid; the review exists to catch misrepresentation. It is one reason the agent stresses accuracy at application.
Why the other options are wrong
- AThe insurer may review a contestable claim before paying.
- BThe insurer does not pay only the premiums unless the contract is voided.
- DDeath within two years does not mean automatic denial.
Exam tip
Contestable claim (within two years): the application is reviewed; accurate applications are paid.
Common mistake
Telling a client the two-year period means claims are not paid in that time.
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.