LLQP Life Insurance · Component 1.2 · 35% of the exam
Which of the following is a limitation of group life coverage that an individual policy does not share?
- AGroup life is taxable to the beneficiary, whereas an individual policy's death benefit is received tax-free
- BThe member cannot name a beneficiary, so group proceeds always pass through the member's estate
- CGroup life has no conversion privilege, so a member who leaves the employer loses all coverage immediately
- The employer can terminate or change the plan without the member's consent
Correct answer: D) The employer can terminate or change the plan without the member's consent
The master contract is between the insurer and the sponsor. Members have certificates, not contracts, and the sponsor controls the plan's existence and terms. Members can name beneficiaries, and conversion privileges normally exist.
Why the other options are wrong
- AGroup life death benefits are tax-free to the beneficiary.
- BGroup members can name beneficiaries.
- CGroup life normally includes a conversion privilege.
Exam tip
The defining limitation of group life is control: the sponsor can amend or end it without the member's consent.
Common mistake
Thinking group certificates are contracts the member controls.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Life Insurance module. Written against the published curriculum.
More from component 1
- A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:
- A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:
- A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:
- A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?
- Which of the following is a capital expense arising at death, rather than an ongoing income need?
- A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.