LLQP Accident & Sickness · Component 2.1 · 30% of the exam
A group LTD plan may be either 'insured' or 'administrative services only (ASO)'. Under ASO:
- AEmployees bear the claims risk through higher payroll deductions in any year with heavy claims
- The employer self-funds claims and pays the insurer only to administer them, taking the risk
- CThere is no administration, since the employer pays claims directly from its own operating accounts
- DThe insurer bears the risk but charges a separate fee for administering the plan's claims
Correct answer: B) The employer self-funds claims and pays the insurer only to administer them, taking the risk
ASO transfers risk to the employer. Because LTD claims are long and large, ASO is more common for health and dental; stop-loss coverage may be added.
Why the other options are wrong
- AEmployees are not the risk-bearers under ASO.
- CThe insurer administers the claims; that is the service being bought.
- DUnder ASO the employer, not the insurer, bears the risk.
Exam tip
ASO = employer self-insures, insurer administers; suits large groups, health/dental.
Common mistake
Recommending ASO for a small employer's LTD.
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.