LLQP Accident & Sickness · Component 1.3 · 35% of the exam
A client asks why inflation matters in a disability needs analysis. The best answer is:
- AInflation raises the premium on a non-cancellable policy at every anniversary
- A disability could last decades, and a fixed benefit loses purchasing power yearly
- CInflation shortens the benefit period because the insurer's claim costs rise over time
- DInflation matters only for group plans, where benefits are indexed by provincial law
Correct answer: B) A disability could last decades, and a fixed benefit loses purchasing power yearly
Long claims are the ones that matter, and over 20 or 30 years inflation can halve real income. The curriculum lists impact of inflation on income among analysis factors.
Why the other options are wrong
- APremiums on non-cancellable policies are locked; inflation does not change them.
- CThe benefit period is contractual and does not shrink with inflation.
- DGroup benefits are not indexed by law; many plans have no COLA at all.
Exam tip
Long-duration claims need inflation protection; recommend COLA where affordable.
Common mistake
Ignoring inflation because the client 'will probably recover quickly'.
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.