LLQP Accident & Sickness · Component 3.2 · 25% of the exam
A recommendation of a level-premium versus step-rate DI policy should be based on:
- AThe lowest first-year premium, since a client who can afford the policy today will keep it
- BThe insurer's preference, since the insurer knows which structure is more profitable for the class
- CNothing, since the two structures cost the same over the life of the policy
- How long the client expects to keep the coverage and the client's cash-flow trajectory
Correct answer: D) How long the client expects to keep the coverage and the client's cash-flow trajectory
Premium structure is a cost-over-time decision. Step-rate is cheaper now, dearer later.
Why the other options are wrong
- AFirst-year cost ignores long-term cost.
- BThe client's situation governs.
- CThey differ materially over time.
Exam tip
Level for long horizon; step-rate for short horizon or cash-strapped growth phase.
Common mistake
Selling step-rate on price without explaining later increases.
What this tests
CISRO competency component 3.2 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Accident & Sickness module. Written against the published curriculum.
More from component 3
- An underwriter assigns a disability applicant to occupational class 2 rather than class 4. The practical effect is that:
- A disability applicant discloses a back condition that resolved four years ago with no recurrence. The likely underwriting outcome is:
- Financial underwriting for an individual disability application exists to:
- A critical illness applicant's mother and sister both had breast cancer before fifty. The underwriter is likely to:
- An applicant for long-term care coverage is seventy-two. The insurer is most likely to require:
- Group long-term disability coverage within the non-evidence maximum is issued without individual medical questions because:
Practice the whole Accident & Sickness module
Timed sets weighted like the exam, and review of every question you miss. Free to start.