LLQP Accident & Sickness · Component 1.3 · 35% of the exam
A client who is the sole owner of a small business with four employees asks what A&S needs her business has. The analysis should identify:
- AA disability buy-sell agreement, so an employee can purchase the business if she is disabled
- BKey person coverage on each employee, since every member of a small team is essential
- Her income, the business's fixed costs, and a group plan as a retention tool for the staff
- DOnly her personal income replacement, since a small business has no insurable exposures
Correct answer: C) Her income, the business's fixed costs, and a group plan as a retention tool for the staff
A sole owner faces a personal income exposure and a business overhead exposure at the same time, and a modest group plan can also serve a practical staffing purpose.
Why the other options are wrong
- AA buy-sell presumes a co-owner or a committed buyer, which she does not have.
- BKey person coverage is reserved for people whose loss would cause measurable financial harm.
- DThe business's continuing fixed costs are a distinct and substantial exposure.
Exam tip
A sole owner has both a personal and a business exposure.
Common mistake
Treating an owner-operator's business needs as if they were personal ones.
What this tests
CISRO competency component 1.3 — 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.