LLQP Accident & Sickness · Component 1.3 · 35% of the exam
A client with a mortgage asks whether he should insure the mortgage against disability. The agent should explain:
- ALender mortgage disability coverage is the best choice because it is underwritten at claim time
- BOnly life insurance can protect a mortgage, since disability coverage cannot pay a lender
- CMortgage obligations cannot be insured against disability under Canadian lending rules
- The payment is one continuing expense in his overall need, and individual DI is more flexible
Correct answer: D) The payment is one continuing expense in his overall need, and individual DI is more flexible
The need is total income replacement; the mortgage is one line in it. Lender products cover one payment, are not portable and end with the loan. Individual DI pays the client, who can direct it anywhere.
Why the other options are wrong
- APost-claim underwriting is a weakness of lender coverage, not a strength.
- BDisability threatens mortgage payments as much as death does, and DI can fund them.
- CMortgage obligations are insurable in several ways.
Exam tip
Treat the mortgage as part of the income need; prefer coverage the client controls.
Common mistake
Layering lender disability coverage on top of adequate individual DI.
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.