LLQP Accident & Sickness · Component 1.3 · 35% of the exam
A client asks whether her emergency fund makes disability insurance unnecessary. The agent should explain that an emergency fund:
- AShould be spent on premiums for a shorter waiting period, since insurance is more reliable
- BReplaces DI entirely for anyone who has saved at least six months of household expenses
- Covers the waiting period and short claims, but cannot fund years of lost income
- DIs useless for disability planning because insurers count it as unearned income at claim
Correct answer: C) Covers the waiting period and short claims, but cannot fund years of lost income
Savings and insurance divide the risk: savings for the short, frequent losses; insurance for the long, rare, ruinous ones.
Why the other options are wrong
- ASavings should be kept for the waiting period, which is what lets the premium fall.
- BSavings are exhausted quickly against years of lost income.
- DSavings are a legitimate short-term resource, not income.
Exam tip
Emergency fund → longer waiting period; DI → long-term risk.
Common mistake
Letting a client self-insure the long-term risk with a few months of savings.
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.