LLQP Life Insurance · Component 3.1 · 25% of the exam
The difference between a 'flat extra' premium and a 'table rating' is that:
- AThere is none, since both are simply ways of describing an increase in the standard premium charged to a rated applicant
- BTable ratings are refunds paid to applicants whose health improves, whereas flat extras are permanent charges
- CFlat extras apply only to group insurance, whereas table ratings are used for individual policies
- A flat extra adds a fixed amount per thousand; a table rating multiplies the premium
Correct answer: D) A flat extra adds a fixed amount per thousand; a table rating multiplies the premium
The two methods reflect different kinds of risk: accident-type hazards add a constant cost regardless of age (flat extra), while medical impairments raise mortality proportionally (table rating). Both can be revisited if the risk changes.
Why the other options are wrong
- AThey are calculated differently and used for different risks.
- BTable ratings increase premiums.
- CFlat extras are an individual underwriting tool.
Exam tip
Flat extra = hazard, per thousand. Table rating = medical, percentage of standard.
Common mistake
Explaining an aviation flat extra to a client as if it were a medical rating.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Life Insurance module. Written against the published curriculum.
More from component 3
- At policy delivery, the agent should obtain:
- The effective date of a life insurance policy is generally:
- A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:
- A pre-authorized debit form is part of implementation because:
- During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:
- Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.