LLQP Life Insurance · Component 2.2 · 30% of the exam
A 'dread disease' (living benefit) rider on a life policy differs from stand-alone critical illness insurance in that:
- AIt has no covered conditions, since it pays on any serious diagnosis the physician certifies
- BIt cannot be added to permanent policies, since the acceleration would interfere with the cash value
- It typically advances part of the death benefit on diagnosis, reducing the death benefit, rather than paying an independent sum
- DIt pays more than stand-alone critical illness insurance, since the life insurer has already underwritten the risk and charges no separate fee
Correct answer: C) It typically advances part of the death benefit on diagnosis, reducing the death benefit, rather than paying an independent sum
A dread disease rider is an acceleration of the life policy's own benefit; a separate critical illness policy or rider pays its own sum without reducing the life coverage. The distinction matters when the family still needs the full death benefit.
Why the other options are wrong
- AIt has covered conditions like any critical illness coverage.
- BIt can be attached to permanent policies.
- DA dread disease rider does not pay more; it advances part of the existing benefit.
Exam tip
Acceleration reduces the death benefit; stand-alone CI does not. Know which design is on the table before recommending.
Common mistake
Selling an accelerated rider as if it left the death benefit intact.
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.