LLQP Accident & Sickness · Component 3.1 · 25% of the exam
Financial underwriting in DI is designed to:
- AConfirm the beneficiary designation matches the client's estate plan and the terms of the will
- Confirm the benefit, with all other coverage, is within issue and participation limits for documented income
- CAssess the client's investment portfolio to decide whether a disability benefit is needed at all
- DCheck the client's credit score to confirm that the premiums are likely to be paid throughout
Correct answer: B) Confirm the benefit, with all other coverage, is within issue and participation limits for documented income
Over-insurance creates moral hazard. Financial underwriting requires income documentation (tax returns, financial statements for business owners) and disclosure of other coverage.
Why the other options are wrong
- ABeneficiaries are irrelevant to the DI amount.
- CInvestments matter only as unearned income offsets.
- DCredit scores are not the focus of financial underwriting.
Exam tip
Financial underwriting: document income, disclose all other disability coverage.
Common mistake
Applying for a benefit the client's tax returns cannot support.
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:
- 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.