LLQP Accident & Sickness · Component 1.3 · 35% of the exam
A business owner asks what would happen to her fixed costs if she were disabled for eight months. The need identified is:
- AA disability buy-sell agreement, which transfers her interest to a purchaser during the disability
- Business overhead expense coverage, which reimburses eligible fixed costs for a limited period
- CKey person coverage, which compensates the business for the loss of her contribution
- DPersonal disability income, which she can redirect to the business while she recovers
Correct answer: B) Business overhead expense coverage, which reimburses eligible fixed costs for a limited period
Overhead coverage exists precisely to keep rent, utilities, staff wages and leases paid during a temporary disability so the practice survives until the owner returns.
Why the other options are wrong
- AA buy-sell funds a transfer of ownership, not the running costs of a temporary absence.
- CKey person coverage responds to the loss of an employee's contribution, not to overhead.
- DPersonal benefits are sized to household needs and would be consumed by the business.
Exam tip
Overhead keeps the doors open; personal DI keeps the household running.
Common mistake
Covering the owner's income and leaving the business's fixed costs unfunded.
What this tests
CISRO competency component 1.3 — Assess the client's needs and situation — which is weighted at 35% of the Accident & Sickness module. Written against the published curriculum.
More from component 1
- The single most important fact for sizing a client's disability income need is:
- A client's beneficiaries for assets are listed in the fact-finding. Why does this matter for A&S planning?
- A client asks why the agent wants to know how assets are owned (jointly or individually). In the A&S context the answer is:
- A client mentions a back injury five years ago that fully resolved. The agent should:
- Which element of a client's situation most affects the definition of disability that should be recommended?
- Which of the following health facts is most relevant to a client's disability insurance situation?
Practice the whole Accident & Sickness module
Timed sets weighted like the exam, and review of every question you miss. Free to start.