LLQP Life Insurance · Component 1.1 · 35% of the exam
Which of the following most directly affects the length of the income-replacement period in a needs analysis?
- AThe insurer's rating of the life insured, since a rated client's family will need income for a longer period
- The ages of the dependants and the survivor's ability to earn
- CThe client's blood type and other medical markers, which predict how long the survivors will need support
- DThe premium mode chosen, since monthly payment spreads the cost over the full replacement period
Correct answer: B) The ages of the dependants and the survivor's ability to earn
Income is replaced until dependants are independent and/or the survivor can support themselves. A five-year-old implies a long period; a spouse with a career implies a shorter one. Those facts set the horizon.
Why the other options are wrong
- ARatings affect price, not the survivors' need.
- CBlood type has no bearing on the period of need.
- DPremium mode affects cost only.
Exam tip
Period of need = years until dependants are independent or the survivor is self-sufficient.
Common mistake
Using the client's working life as the replacement period regardless of the dependants' ages.
What this tests
CISRO competency component 1.1 — 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.