LLQP Accident & Sickness · Component 1.2 · 35% of the exam
A group LTD plan has an 'all-sources maximum' of 85% of pre-disability earnings. This means:
- AThe plan pays 85% of pre-disability earnings regardless of other benefits
- BThe employee must contribute 85% of the LTD premium for the benefit to be tax-free
- CThe plan's benefit is reduced so income from all sources stays within 85% of earnings
- The plan pays nothing until other sources fall below 85% of earnings
Correct answer: D) The plan pays nothing until other sources fall below 85% of earnings
The all-sources maximum caps combined disability income to preserve the incentive to return to work. Individual coverage bought on top of a group plan may be offset by it, which is why the agent must read the plan.
Why the other options are wrong
- AThe plan's own formula is separate; 85% is the combined ceiling from all sources.
- BPremium sharing is unrelated to the all-sources maximum.
- CThe plan pays up to the ceiling; it does not wait for other sources to fall.
Exam tip
All-sources maximum limits combined disability income; check it before adding individual coverage.
Common mistake
Adding individual DI that the group plan's all-sources maximum will offset.
What this tests
CISRO competency component 1.2 — 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.