LLQP Accident & Sickness · Component 3.2 · 25% of the exam
When recommending ownership of a personal DI policy for an incorporated professional, the agent should generally advise:
- AOwnership by the spouse, so that the benefit is paid to the household rather than to the professional
- Personal ownership with after-tax premiums so benefits are tax-free
- CJoint ownership by the professional and the corporation, so that each can claim half the deduction
- DCorporate ownership so that the premiums can be deducted as a business expense
Correct answer: B) Personal ownership with after-tax premiums so benefits are tax-free
The curriculum lists tax implications of a personal policy being corporately held. Tax-free benefits usually outweigh a premium deduction.
Why the other options are wrong
- AThe insured should own personal DI.
- CDI is individually owned.
- DDeducting premiums typically taxes the benefit.
Exam tip
Personal DI: personal ownership, after-tax premiums, tax-free benefit.
Common mistake
Running personal DI premiums through the corporation.
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
- 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.