LLQP Accident & Sickness · Component 2.1 · 30% of the exam
Business overhead expense insurance typically covers:
- AInventory purchases and cost of goods sold for the period of the owner's disability
- BThe owner's lost net profit for each month the business operates without them
- CThe owner's own salary draw and personal living expenses during the disability
- Rent, utilities, staff salaries, leases and similar fixed costs, for a limited period
Correct answer: D) Rent, utilities, staff salaries, leases and similar fixed costs, for a limited period
BOE reimburses actual eligible overhead, not the owner's income or profit. Benefit periods are short because the business is expected to be sold or the owner to return within a couple of years.
Why the other options are wrong
- ACost of goods and inventory are generally excluded.
- BProfit is not an expense.
- CThe owner's salary is covered by personal DI.
Exam tip
BOE reimburses eligible overhead; excludes owner's income, inventory, and often replacement salary for the owner's role.
Common mistake
Expecting BOE to replace the owner's personal income.
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.