LLQP Accident & Sickness · Component 1.1 · 35% of the exam
A client is a farmer whose income varies with the harvest and who lives on the operation. The A&S analysis should treat:
- AThe farm's gross revenue as his income, since the operation and the household are a single unit
- BOnly the value of the land, since a farm's worth lies in its assets rather than its annual income
- CThe farm as uninsurable, since agricultural income cannot be verified from tax documentation
- His net farm income as the amount to replace, and the farm's fixed costs as a separate overhead need
Correct answer: D) His net farm income as the amount to replace, and the farm's fixed costs as a separate overhead need
Personal disability coverage replaces what the operator takes out of the business, while the farm's continuing fixed costs are an overhead exposure addressed by a separate product.
Why the other options are wrong
- AGross revenue is not income; the expenses of the operation come out of it first.
- BLand value is a resource, not the income a disability would interrupt.
- CFarm income is documented from tax returns and financial statements like any business income.
Exam tip
Separate the operator's income need from the operation's overhead need.
Common mistake
Quoting a benefit on a farm's gross revenue.
What this tests
CISRO competency component 1.1 — 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.