LLQP Life Insurance · Component 2.1 · 30% of the exam
An applicant is offered coverage with a flat extra premium rather than a table rating. The difference is that a flat extra:
- Areduces the death benefit instead of increasing the premium charged
- Bis charged only in the first policy year and disappears at the first anniversary
- Capplies a percentage increase to the standard premium for the life of the contract
- adds a fixed amount per unit of coverage, often for a limited number of years
Correct answer: D) adds a fixed amount per unit of coverage, often for a limited number of years
Flat extras suit a temporary or specific hazard such as an occupation or an activity, and they often come off after a stated period. A table rating reflects a continuing mortality risk and is applied as a multiple.
Why the other options are wrong
- ANeither method reduces the benefit; both adjust the premium.
- BFlat extras generally run for several years or for the contract.
- CThat describes a table rating rather than a flat extra.
Exam tip
Flat extra equals a fixed add-on, often temporary; table rating equals a multiple.
Common mistake
Treating every rating as permanent when a flat extra may be reviewable.
What this tests
CISRO competency component 2.1 — 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.