LLQP Accident & Sickness · Component 4.2 · 10% of the exam
Benefits from a personally owned, personally paid DI policy received during a claim are:
- AReported as taxable income on a slip issued by the insurer, like any other replacement of earnings
- BTaxable at 50%, since disability benefits are treated in the same way as capital gains
- Not taxable and not reported on a slip, unlike employer-paid group benefits, which are taxable
- DTaxable only after the claim has continued for twelve months, when the benefit becomes regular income
Correct answer: C) Not taxable and not reported on a slip, unlike employer-paid group benefits, which are taxable
Informing the claimant of tax treatment is part of claims service. Employer-paid group benefits are taxable and slips are issued.
Why the other options are wrong
- APersonal DI is tax-free.
- BNo partial inclusion.
- DNo time-based taxation.
Exam tip
Personal DI benefits: no tax slip. Employer-paid group: taxable.
Common mistake
Telling a claimant all disability income is taxable.
What this tests
CISRO competency component 4.2 — 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.