LLQP Accident & Sickness · Component 1.3 · 35% of the exam
A client asks what percentage of pre-disability income she should aim to replace. The agent's guidance is:
- Enough after-tax income for continuing expenses — often 60–70% of gross
- B100% of gross income, so that her current standard of living is fully preserved
- C25% of gross income, since the rest is normally covered by government benefits
- D200% of gross income, to cover both lost pay and the extra costs of disability
Correct answer: A) Enough after-tax income for continuing expenses — often 60–70% of gross
Insurers' issue limits and the tax-free nature of individual benefits combine to make 60–70% of gross a practical target for most clients. The specific figure comes from the expense analysis.
Why the other options are wrong
- BFull replacement is not offered and not needed after tax.
- CA quarter of income would not maintain the standard of living.
- DOver-insurance is not permitted.
Exam tip
Practical target: 60–70% of gross, tax-free, within issue limits.
Common mistake
Quoting a percentage without connecting it to the expense analysis.
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.