LLQP Accident & Sickness · Component 3.2 · 25% of the exam
For a business with two equal owners and a buy-sell agreement covering disability, the recommendation should include:
- Buyout coverage on each owner matched to the agreement's valuation and trigger, plus personal DI and BOE
- BGroup LTD only, since the owners are employees of the business and can be covered as members
- CPersonal DI only, sized so that the benefit could also fund the purchase of the disabled partner's interest
- DKey person life insurance only, since the partnership agreement's trigger is a matter for the estate
Correct answer: A) Buyout coverage on each owner matched to the agreement's valuation and trigger, plus personal DI and BOE
The buyout policy funds the obligation; personal DI protects each owner's income; BOE protects the business's fixed costs. All three needs were articulated.
Why the other options are wrong
- BGroup LTD is employee income replacement.
- CPersonal DI does not fund the buyout.
- DLife coverage does not address disability.
Exam tip
Owners: buyout + personal DI + BOE.
Common mistake
Mismatching the buyout policy's elimination period with the agreement's definition of permanent disability.
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
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- 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.