LLQP Life Insurance · Component 1.3 · 35% of the exam
Which of the following is NOT typically a need that life insurance is used to meet?
- AProviding estate liquidity so that taxes and debts can be paid without selling the family's assets
- BReplacing the income the family loses when the earner dies during the children's dependent years
- CFunding a buy-sell agreement so the surviving partner can purchase the deceased partner's share at death
- Replacing income lost while the insured is disabled but alive
Correct answer: D) Replacing income lost while the insured is disabled but alive
Income lost during disability is the domain of disability insurance (the A&S module). Life insurance addresses needs arising from death: replacement of income, liquidity, bequests, business succession.
Why the other options are wrong
- AEstate liquidity is a classic life insurance need.
- BIncome replacement is the core life insurance need.
- CFunding a buy-sell at death is a standard business use of life insurance.
Exam tip
Life insurance responds to death. Anything triggered by disability while alive belongs to A&S products.
Common mistake
Listing disability income among the needs life insurance meets.
What this tests
CISRO competency component 1.3 — Assess the client's needs and situation — which is weighted at 35% of the Life Insurance module. Written against the published curriculum.
More from component 1
- A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:
- A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:
- A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:
- A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?
- Which of the following is a capital expense arising at death, rather than an ongoing income need?
- A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.