LLQP Accident & Sickness · Component 2.2 · 30% of the exam
A cost-of-living adjustment (COLA) rider on a DI policy:
- AIncreases the premium each year in line with the consumer price index published by Statistics Canada
- Increases the benefit in payment each year of a claim, protecting long claims from inflation
- CIncreases the benefit amount each year before a claim so that coverage keeps pace with income growth
- DReduces the waiting period each year the policy remains in force without a claim being made
Correct answer: B) Increases the benefit in payment each year of a claim, protecting long claims from inflation
COLA operates during a claim. Some policies also offer pre-claim indexing of the benefit amount as a separate feature. COLA is most valuable to younger insureds with decades of potential claim.
Why the other options are wrong
- ACOLA affects benefits, not premiums.
- CPre-claim indexing is a different feature (automatic increase benefit).
- DThe waiting period is unaffected.
Exam tip
COLA = benefit indexed during a claim. Young client + long benefit period = high value.
Common mistake
Confusing COLA with FPO.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Accident & Sickness module. Written against the published curriculum.
More from component 2
- A group benefits booklet lists AD&D coverage alongside life and LTD. The AD&D benefit pays:
- A hospital indemnity (hospital cash) policy pays:
- Employment Insurance sickness benefits are available to:
- Which government program coordinates with an individual DI policy through a possible offset AND also affects the definition of insurable income?
- A group plan's 'eligibility waiting period' (probationary period) is:
- A CI policy that is 'convertible' allows the insured to:
Practice the whole Accident & Sickness module
Timed sets weighted like the exam, and review of every question you miss. Free to start.