LLQP Accident & Sickness · Component 4.1 · 10% of the exam
A group plan sponsor asks to change the LTD formula from employer-paid to employee-paid mid-year. The agent should explain:
- AThe change takes effect automatically once payroll deductions begin, with no amendment to the master policy
- BThe change cannot be made mid-year, since the tax treatment of a group plan is fixed for each calendar year
- CThe change affects only employees hired after the effective date, since existing members keep their terms
- It is an amendment affecting taxability, requiring employee communication and a check on claims in progress
Correct answer: D) It is an amendment affecting taxability, requiring employee communication and a check on claims in progress
Plan amendments have contractual, tax and communication implications. Ongoing claims follow the terms in effect when they began.
Why the other options are wrong
- AAmendments require action.
- BAmendments are common.
- CIt affects all members going forward.
Exam tip
Group amendment: master policy change, tax effect, employee communication, claims-in-progress.
Common mistake
Changing premium sharing without telling employees the tax consequence.
What this tests
CISRO competency component 4.1 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Accident & Sickness module. Written against the published curriculum.
More from component 4
- The agent's role in the claims process is to:
- A client with a non-cancellable DI policy stops paying premiums after a dispute with the insurer about a claim. The agent should warn that:
- When a client moves to another province, the agent should:
- A client asks to reduce the waiting period on his in-force disability policy. The agent should explain that the change:
- A client's disability policy lapsed six weeks ago for non-payment. The agent should:
- A client on claim asks whether she must keep paying premiums. The accurate answer depends on:
Practice the whole Accident & Sickness module
Timed sets weighted like the exam, and review of every question you miss. Free to start.