LLQP Accident & Sickness · Component 3.1 · 25% of the exam
Financial underwriting for an individual disability application exists to:
- Ensure the benefit does not exceed a share of earned income, so working remains worthwhile
- BDetermine whether the applicant's employer is financially able to continue the group plan
- CConfirm the applicant can afford the premium over the whole life of the disability contract
- DEstablish the applicant's credit rating so the insurer can price the risk of missed premiums
Correct answer: A) Ensure the benefit does not exceed a share of earned income, so working remains worthwhile
Insurers cap replacement below full income to preserve the incentive to return to work, which is why earnings, other coverage and unearned income all feed the issue limit.
Why the other options are wrong
- BThe employer's finances are a group underwriting matter.
- CAffordability is the client's decision, not an underwriting test.
- DCredit ratings are not used to price individual disability coverage.
Exam tip
Financial underwriting protects the incentive to recover.
Common mistake
Applying for a benefit that exceeds the insurer's issue limit for the income.
What this tests
CISRO competency component 3.1 — 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:
- 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:
- An applicant is a professional with a high income but heavy business debt. In financial underwriting the debt:
Practice the whole Accident & Sickness module
Timed sets weighted like the exam, and review of every question you miss. Free to start.