LLQP Life Insurance · Component 1.3 · 35% of the exam
A client's spouse would receive a substantial survivor pension from a defined benefit plan. In the analysis this should be:
- Aignored, since pension benefits are too uncertain to include in any calculation
- included as survivor income, at the reduced percentage the plan actually pays
- Cincluded at the member's full pension amount for the survivor's whole lifetime
- Dtreated as a lump sum equal to the total of all payments the survivor would receive
Correct answer: B) included as survivor income, at the reduced percentage the plan actually pays
Survivor pensions typically pay a reduced percentage of the member's benefit. Using the plan's actual survivor percentage, and checking whether indexing applies, gives a realistic figure for the calculation.
Why the other options are wrong
- AA contractual pension benefit is a reliable resource to include.
- CSurvivor benefits are usually a fraction of the member's pension.
- DThe analysis works with the income stream, not an undiscounted total.
Exam tip
Use the plan's actual survivor percentage, not the member's full pension.
Common mistake
Counting a survivor pension at the full member benefit.
What this tests
CISRO competency component 1.3 — 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.