Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What is the basis on which the 3D Policy is issued?

1. Monthly renewal basis

2. Annual premium payment basis

3. Continuous until cancelled basis

4. Life of the insured basis

The correct answer is: Continuous until cancelled basis

The 3D Policy is issued on a continuous until cancelled basis, meaning that the coverage remains in effect until either the policyholder or the insurer decides to terminate it. This approach allows for flexibility and long-term protection, as there is no need for regular renewals or re-evaluations at specific intervals. Instead, the policy automatically renews, ensuring continuous coverage unless a cancellation notice is provided. In contrast, other options revolve around more structured time frames, such as monthly or annual renewals, which require action to maintain coverage. The continuous basis is particularly advantageous in providing peace of mind, as policyholders do not need to worry about reapplying or managing their policies annually. Additionally, the life of the insured basis, which suggests a connection between coverage duration and the insured's lifespan, is not typically how insurance policies like the 3D Policy are structured, reinforcing the significance of the continuous until cancelled aspect.