LLQP Accident & Sickness · Component 1.1 · 35% of the exam
A client owns her own consulting business with no employees. Which business expense would continue if she were disabled?
- ANone, because a sole consultant's costs stop the moment the work stops and resume when she returns
- BHer own salary draw, which the business must keep paying her each month because a sole proprietor is its only employee
- CIncome tax instalments on the profit she would otherwise have earned
- Office rent, equipment leases, professional fees and insurance — fixed overhead
Correct answer: D) Office rent, equipment leases, professional fees and insurance — fixed overhead
Fixed overhead continues during an owner's disability and is the target of business overhead expense insurance. Distinguishing overhead from personal income is part of assessing a business owner's situation.
Why the other options are wrong
- AFixed costs continue regardless of whether the owner can work.
- BHer salary is the personal income need covered by personal DI, not overhead.
- CInstalments fall with profit; they are not fixed overhead.
Exam tip
Business owner = two needs: personal income (DI) and business overhead (BOE).
Common mistake
Covering the owner's income but leaving the business's fixed costs unfunded.
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.