LLQP Life Insurance · Component 2.2 · 30% of the exam
A critical illness rider attached to a life insurance policy:
- Pays a lump sum on diagnosis of a covered condition after a survival period, in addition to or by acceleration of the life coverage
- BPays a monthly income for the duration of the illness, in the same way as disability insurance pays while the insured cannot work
- CReplaces the death benefit entirely, so the policy becomes a living benefit contract once a claim is made
- DIs always included free of charge, since the insurer has already underwritten the life insured's health
Correct answer: A) Pays a lump sum on diagnosis of a covered condition after a survival period, in addition to or by acceleration of the life coverage
CI riders come in stand-alone and accelerated designs. The agent must know which one is being sold: an accelerated design reduces the death benefit, a stand-alone design does not. The survival period and the list of covered conditions are the other terms to compare.
Why the other options are wrong
- BCI pays a lump sum, not monthly income.
- CA CI rider adds a living benefit; it does not replace the death benefit.
- DCI riders carry a premium.
Exam tip
CI rider designs: stand-alone (no effect on death benefit) versus accelerated (reduces it). Check the survival period and covered conditions.
Common mistake
Failing to tell the client that an accelerated CI claim reduces the death benefit.
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.