LLQP Accident & Sickness · Component 3.2 · 25% of the exam
A client asks whether to buy critical illness coverage with or without a return of premium rider. The agent should explain that:
- The rider raises the premium materially and vests only at a stated point, so early cancellation forfeits it
- BThe rider refunds premiums at every anniversary in which no claim has been made
- CThe rider is compulsory on critical illness contracts under provincial insurance legislation
- DThe rider is free, since the insurer funds it from the investment return earned on the premiums it holds
Correct answer: A) The rider raises the premium materially and vests only at a stated point, so early cancellation forfeits it
A return of premium feature answers the objection that the coverage may never pay, but it is paid for through a substantially higher premium and it rewards only those who keep the contract to the vesting date.
Why the other options are wrong
- BRefunds vest at stated points rather than each year.
- CNo legislation requires the rider.
- DThe rider is funded by the additional premium the client pays for it.
Exam tip
Return of premium costs real money and vests on a date.
Common mistake
Presenting a return of premium rider as free insurance.
What this tests
CISRO competency component 3.2 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Accident & Sickness module. Written against the published curriculum.
More from component 3
- An underwriter assigns a disability applicant to occupational class 2 rather than class 4. The practical effect is that:
- A disability applicant discloses a back condition that resolved four years ago with no recurrence. The likely underwriting outcome is:
- Financial underwriting for an individual disability application exists to:
- A critical illness applicant's mother and sister both had breast cancer before fifty. The underwriter is likely to:
- An applicant for long-term care coverage is seventy-two. The insurer is most likely to require:
- Group long-term disability coverage within the non-evidence maximum is issued without individual medical questions because:
Practice the whole Accident & Sickness module
Timed sets weighted like the exam, and review of every question you miss. Free to start.