LLQP Life Insurance · Component 4.2 · 10% of the exam
Which of the following could reduce the amount paid on a death claim?
- AThe insured's marital status at death, since a married insured's benefit is split with the spouse by law
- An outstanding policy loan with interest, unpaid premiums during a grace period, or a collateral assignment
- CThe number of beneficiaries named, since the insurer deducts an administration fee for each payment it makes
- DThe beneficiary's income, since the insurer withholds tax at source for beneficiaries in a higher bracket
Correct answer: B) An outstanding policy loan with interest, unpaid premiums during a grace period, or a collateral assignment
Policy loans and interest are deducted; a premium due during the grace period is deducted; an assignee is paid before the beneficiary. The curriculum lists 'factors that could result in a lower payment'; the agent should tell claimants what to expect.
Why the other options are wrong
- AMarital status of the insured does not reduce the benefit.
- CThe number of beneficiaries affects the split, not the total.
- DThe beneficiary's income does not affect the payment.
Exam tip
Deductions from a death benefit: policy loans and interest, premiums due in the grace period, collateral assignments.
Common mistake
Forgetting an outstanding policy loan when telling a family what to expect.
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.