LLQP Life Insurance · Component 2.2 · 30% of the exam
A client wants to know whether a critical illness claim would reduce the death benefit of his life policy. The answer depends on whether the coverage is:
- Apaid monthly as an income stream or in a single lump sum
- an accelerated benefit drawn from the death benefit or an additional amount
- Cpurchased at the same time as the base policy or added at a later date
- Dissued by the same insurer as the life policy or by a different company
Correct answer: B) an accelerated benefit drawn from the death benefit or an additional amount
An accelerated benefit advances part of the death benefit, so what is paid at death is reduced. An additional benefit sits alongside the life coverage and leaves the death benefit untouched.
Why the other options are wrong
- APayment form does not determine whether the benefit is accelerated.
- CTiming of purchase does not determine the structure.
- DThe issuing company does not determine the structure of the benefit.
Exam tip
Accelerated benefits come out of the death benefit; additional ones do not.
Common mistake
Assuming a living benefit never reduces what the family receives.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.