LLQP Life Insurance · Component 2.1 · 30% of the exam
Membership classes in a group plan allow the sponsor to:
- ACharge each member a different premium based on health, so the healthiest members pay the least
- Provide different benefit levels to different categories of members on a non-discriminatory, objective basis
- CAvoid the non-evidence maximum, since each class is underwritten separately from the others
- DExclude particular individuals the sponsor prefers not to cover, by placing them in a class with no benefits
Correct answer: B) Provide different benefit levels to different categories of members on a non-discriminatory, objective basis
Classes must be defined by objective criteria such as job category, salary band or years of service. Within a class, members are treated alike. Classes let a plan match coverage to compensation without individual underwriting.
Why the other options are wrong
- AIndividual health-based premiums are the opposite of group rating.
- CThe non-evidence maximum applies within classes.
- DClasses must be objective and non-discriminatory.
Exam tip
Classes are defined by objective criteria (job category, salary band, service). Within a class, everyone is treated the same.
Common mistake
Designing classes that single out named individuals.
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.