LLQP Accident & Sickness · Component 2.1 · 30% of the exam
A 'graded' or 'step-rate' premium structure on a DI policy means:
- Premiums start lower and rise at set ages, eventually exceeding a level premium
- BPremiums fall with age because the remaining benefit period to 65 grows steadily shorter
- CPremiums are level for life but graded by occupational class at the time of issue
- DPremiums are waived in stages as the insured's income rises above the insurable maximum
Correct answer: A) Premiums start lower and rise at set ages, eventually exceeding a level premium
Step-rate premiums trade a low entry cost for higher later cost. Level premiums are more expensive at issue but cheaper over a long horizon.
Why the other options are wrong
- BPremiums rise, not fall, under a step-rate structure.
- CThat describes a level premium.
- DWaiver is a separate provision unrelated to premium structure.
Exam tip
Step-rate = cheaper now, dearer later. Level = the opposite.
Common mistake
Recommending step-rate for a young client who will keep the policy 30 years.
What this tests
CISRO competency component 2.1 — 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.