LLQP Accident & Sickness · Component 1.1 · 35% of the exam
A client's income has fallen sharply this year due to a slow business. For DI purposes:
- AThe insurer will use last year's higher income as the insurable amount, since a single slow year is treated as an anomaly
- Coverage is likely limited to current averaged income, so existing coverage should be kept
- CIncome is not considered at all when the client is self-employed
- DThe client is uninsurable until income returns to its previous level
Correct answer: B) Coverage is likely limited to current averaged income, so existing coverage should be kept
Insurers underwrite to demonstrable current income. A downturn limits new coverage. This is a reason to buy DI while income is strong and to keep it through slow periods.
Why the other options are wrong
- AUnderwriters look at current and averaged income, not a past peak.
- CIncome is the basis of every DI benefit, employed or self-employed.
- DReduced income limits the amount; it does not bar coverage.
Exam tip
Buy DI when income is high; keep it when income dips.
Common mistake
Cancelling DI during a slow year and being unable to replace it later.
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.