LLQP Accident & Sickness · Component 3.2 · 25% of the exam
A client's existing DI policy from ten years ago has an own-occupation definition, non-cancellable premium and no offsets, but a benefit now well below her income. The recommendation should be:
- AReplace it with a new policy at today's benefit level, so that all coverage is under one contract
- BCancel it, since a benefit well below income no longer justifies the premium
- CReduce it, since the insurer will otherwise cut the benefit under the relation-of-earnings clause
- Keep it and add a new policy for the additional amount, coordinating the periods
Correct answer: D) Keep it and add a new policy for the additional amount, coordinating the periods
Replacement of favourable old coverage is rarely justified. Supplementing preserves the old terms and fills the gap.
Why the other options are wrong
- AReplacement forfeits superior terms and restarts contestability.
- BCancellation loses irreplaceable coverage.
- CThe problem is too little coverage, not too much.
Exam tip
Old favourable DI: keep and supplement, do not replace.
Common mistake
Replacing an old policy to consolidate 'for simplicity'.
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.