LLQP Life Insurance · Component 1.2 · 35% of the exam
A client's individual disability policy reduces its benefit by any group benefits he receives. In the review this means:
- Athe group plan will be reduced instead, leaving the individual benefit paid in full
- the combined benefit may be lower than the two amounts suggest, so both must be read together
- Cthe client can claim both benefits in full because they come from different insurers
- Dthe individual policy is worthless and should be cancelled without further consideration
Correct answer: B) the combined benefit may be lower than the two amounts suggest, so both must be read together
An integrated or offset provision coordinates benefits so total income does not approach full earnings. Reading the two contracts together shows what would actually be received, which the analysis must use.
Why the other options are wrong
- AThe group plan pays first and the individual policy adjusts around it.
- CAn offset provision exists precisely to prevent full stacking.
- DThe individual policy still provides coverage and often continues after employment ends.
Exam tip
Read offset provisions before adding two disability benefits together.
Common mistake
Adding group and individual benefits without checking for an offset.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Life Insurance module. Written against the published curriculum.
More from component 1
- A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:
- A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:
- A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:
- A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?
- Which of the following is a capital expense arising at death, rather than an ongoing income need?
- A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.