LLQP Accident & Sickness · Component 1.1 · 35% of the exam
A client's monthly cash-flow statement is used in a disability needs analysis to:
- AConfirm the client's marginal tax rate for the after-tax benefit calculation
- BEstablish the client's insurable income for the insurer's financial underwriting
- CShow how much monthly premium the client can comfortably afford to pay without disturbing the household budget
- Identify the expenses that continue during disability and so the income to replace
Correct answer: D) Identify the expenses that continue during disability and so the income to replace
The curriculum lists monthly and yearly cash flow for family and business. During disability most expenses continue and some (medical, care) rise; the analysis identifies what must be covered.
Why the other options are wrong
- AThe tax rate comes from the tax return, not from a cash-flow statement.
- BInsurable income is documented by tax returns; the cash flow shows expenses.
- CAffordability is a by-product; the statement's purpose is to size the need.
Exam tip
Disability replaces expenses that continue; build the need from the cash-flow statement.
Common mistake
Assuming expenses fall during disability; they often rise.
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.