LLQP Accident & Sickness · Component 1.1 · 35% of the exam
A client's income consists of a modest salary plus large annual bonuses. For disability insurance purposes the agent should:
- Document both, since insurers count regular bonuses averaged over recent years
- BUse twice the base salary as a standard proxy for total variable compensation, since bonuses cannot be documented
- CUse the base salary only, since bonuses are discretionary and not guaranteed
- DUse the bonuses only, since they represent the client's real earning power
Correct answer: A) Document both, since insurers count regular bonuses averaged over recent years
Insurable income includes regular bonuses and commissions where they can be substantiated, usually averaged. Ignoring them under-insures a client whose real earnings are far above base salary.
Why the other options are wrong
- BDoubling salary has no basis; insurers average documented variable pay.
- CRegular bonuses are earned income and insurers count them when substantiated.
- DSalary is earned income too; leaving it out under-insures the client.
Exam tip
Insurable income = base + averaged variable compensation, documented by tax returns.
Common mistake
Sizing the benefit on base salary alone for a commission-heavy client.
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.