LLQP Ethics & Professional Practice · Component 1.6 · 60% of the exam
A disability claimant asks why no benefit has arrived although her claim was approved. The likely explanation is that:
- Abenefits are withheld until the claimant has returned to work on a part-time basis
- the elimination period must expire before benefits begin, and payment follows in arrears
- Cthe insurer pays only once the disability has been shown to be permanent and total in nature
- Dapproval of a claim does not create any obligation on the insurer to make payments
Correct answer: B) the elimination period must expire before benefits begin, and payment follows in arrears
Disability contracts have an elimination period during which no benefit accrues, and payment is generally made after the fact for the period completed. The claimant should also expect requests for continuing proof of disability.
Why the other options are wrong
- AReturning to work usually reduces or ends benefits rather than starting them.
- CPermanence is not required under most disability definitions.
- DAn approved claim obliges the insurer to pay according to the contract.
Exam tip
Elimination period first, then benefits paid in arrears.
Common mistake
Expecting a disability benefit to start on the day the disability began.
What this tests
CISRO competency component 1.6 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.