LLQP Accident & Sickness · Component 3.1 · 25% of the exam
The insurer's underwriting of a DI application is also influenced by the 'purpose' of the coverage because:
- AAll coverage is subject to the same issue limit regardless of whether it is personal or business
- BPurpose is irrelevant, since the insurer underwrites the life insured rather than the reason for cover
- Each purpose has its own limits and documentation — income, overhead, valuation or profit contribution
- DOnly personal coverage is underwritten, since business coverage is issued on the company's application
Correct answer: C) Each purpose has its own limits and documentation — income, overhead, valuation or profit contribution
Each product has its own financial underwriting logic. A buyout policy requires a copy of the agreement; BOE requires expense evidence.
Why the other options are wrong
- ALimits vary by product.
- BPurpose determines documentation and limits.
- DBusiness products are underwritten too.
Exam tip
Underwriting documents follow purpose: income, overhead, agreement/valuation, profit contribution.
Common mistake
Applying for buyout coverage without a signed buy-sell agreement.
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.