LLQP practice exams

A company's top salesperson brings in $1,500,000 of sales at a 30% margin. Replacing her would take 8 months, and recruiting costs would be $40,000. Which key person DI amount best reflects the loss?

• A$490,000, a full year of margin plus recruiting
• B$300,000, lost margin without recruiting
• C$340,000
• D$450,000, a full year of margin

How much margin is lost during the replacement period?

Karl has $4,500 in savings, essential expenses of $4,000 a month and no sick-leave pay. He is offered a 30-day or a 90-day elimination period. Which fits his resources?

• A30 days
• BNeither, since DI cannot be sold without an emergency fund
• C90 days
• DEither one, since the premium is the only difference

How many days can $4,500 cover?

Pierre's indemnity LTC policy pays $120 a day after a 90-day elimination period. He becomes unable to dress and bathe himself on February 1 and remains eligible. How much has the policy paid for the first 120 days of eligibility?

• A$3,600
• B$7,200
• C$10,800
• D$14,400

Benefits are not paid for the days of the elimination period.

In an Ontario resident's extended health plan, what does the semi-private hospital room benefit usually pay?

• AA set cash amount for each day spent in hospital, whatever type of room is used
• BThe full cost of the hospital stay, including the fees of the physicians
• CThe difference between OHIP's ward rate and the semi-private room charge
• DThe cost of a private room in any hospital, in Canada or abroad

OHIP already pays for standard ward accommodation.

What is the role of the elimination period in a disability contract?

• AIt is the period after which benefits stop, which ends the benefit period
• BThe period after onset of disability when no benefits are paid; a longer one lowers the premium
• CIt is the period during which the insurer investigates the claim and may then deny it for any reason
• DIt is the period during which the insured pays no premium for the policy

When do benefits start to accrue?

Rob, 52, the sole earner for his family, has no other income and wants any claim to protect his family until his pension starts at 65. Which benefit period should his agent recommend?

• ATo age 65
• B10 years, because premiums are lower than for a benefit period to age 65
• C5 years, because it is the usual choice for clients over age 50
• D2 years, because most disabilities end within that time and it costs less

What is the longest disability he needs protection against?

How does a business overhead expense policy pay its benefit during a disability?

• AIt pays a percentage of the owner's pre-disability personal income
• BIt pays the full monthly maximum whether or not the expenses were incurred
• CIt reimburses the eligible expenses actually incurred, up to the monthly maximum
• DIt pays a lump sum equal to the expenses forecast for the whole benefit period

Is this an indemnity for actual costs or a fixed amount?

Ahmed, 34, a sole earner in Alberta with two young children, owns $750,000 of term life insurance but no disability coverage. He believes his family is fully protected. What should his agent point out?

• AHis life policy will pay a living benefit if he is disabled for more than 90 days, so the gap is small
• BCPP disability will replace his full income, so a private policy would only duplicate it
• CThe life policy pays nothing if he becomes disabled, and a long disability is the likelier event
• DDisability is rare before 65, so the $750,000 policy covers the main risk

Does term life insurance pay while the insured is alive?

Daniel, 41, had a rotator cuff repair in 2023. The insurer offers his disability policy with a rider excluding any disability of the right shoulder. Daniel asks whether the exclusion will disappear after two years, as a pre-existing condition clause would. What should the agent answer?

• AYes, but only if Daniel stays free of shoulder symptoms and tells the insurer in writing
• BNo, and the insurer is also allowed to extend the rider to cover other joints later
• CYes, every exclusion in a disability policy lapses after two years of regular premium payments
• DNot automatically; an exclusion rider usually stays unless the insurer agrees to remove it

Does the rider have an end date?

In a key person disability policy, who is normally the policyowner, premium payer and beneficiary?

• AThe business's lender, as security for the outstanding credit
• BThe key person, who then lends the proceeds to the business
• CThe business, which is the party that suffers the loss
• DThe key person's family, to make up for the lost salary

Ask who loses money when the key person is disabled.

Gurpreet, 68, bought travel medical insurance requiring heart conditions to be stable for 90 days before departure. Forty-five days before he left, his cardiologist increased the dosage of his heart medication. In Arizona, he has a heart attack and, on another day, breaks his wrist in a fall. What is covered?

• ABoth, since the dosage change was ordered by his own doctor
• BNeither, since the unstable condition voids the whole policy
• COnly the wrist fracture, not the heart attack
• DBoth, but the heart attack at 50% of eligible costs

Check whether each claim is related to the condition that was unstable.

Why should an agent document the reasons for the elimination period and benefit period chosen by the client?

• ATo make the elimination period legally binding on the client's employer and the insurer
• BTo prevent the insurer from changing those features later at renewal or after a claim
• CTo show the recommendation fit the client's needs and budget, and that the client understood it
• DTo allow the agent to adjust the periods on the client's behalf after a claim is submitted

What does the file prove if there is a later dispute?

Randall, 47, has monthly expenses of $3,800 and no savings or group benefits. He is disabled by an illness for a full 12 months. EI sickness benefits pay him $2,100 a month for the 26 weeks (treat as 6 months) and nothing else is received. What is his total income shortfall over the 12 months?

• A$10,200
• B$33,000
• C$45,600
• D$22,800

Find the shortfall separately for the months with EI and the months without.

Sofia, 41, is a self-employed hair stylist in Nova Scotia with no group benefits. She says, "If I am hurt, EI and workers' compensation will take care of my income." What should her agent point out?

• AShe is correct, because both programs cover every worker in the province automatically, whether employed or self-employed, and she need not register
• BShe is partly correct, since both programs pay her a flat amount that is set by her province
• CShe is correct for EI, but workers' compensation would pay her only if the injury occurred outside her salon
• DSelf-employed workers are generally not covered by EI sickness or workers' compensation unless they register

Does a self-employed person pay into these programs automatically?

Why does an Ontario resident travelling to the United States need emergency travel medical insurance, even though OHIP pays something for emergencies outside Canada?

• AOHIP coverage ends completely as soon as the resident leaves Canada
• BOHIP pays after the travel insurer has paid its full maximum
• COHIP pays only limited amounts outside Canada, far below typical US hospital costs
• DUS law requires every visitor to hold private medical insurance before entering

Compare what OHIP pays abroad with what care costs there.

Lena has a group plan through her own employer, and she is also covered as a dependent under her spouse's plan. Both plans reimburse 80% of physiotherapy, and she submits a $600 receipt. The plans coordinate, and Lena's own plan is primary. What does her spouse's plan pay?

• A$480
• B$120
• C$240
• D$0

The primary plan pays first; how much is left?

Which statement about the risk of disability before age 65 is most accurate?

• AA working adult is statistically more likely to die than to suffer a disability of 90 days or more, which is why life insurance comes first
• BDisability risk appears only after age 55, so it is negligible for adults in their thirties and forties
• CA working adult is statistically more likely to suffer a long disability than to die
• DDisability risk is limited to workplace accidents, so most workers are already protected by workers' compensation

What do the statistics say when the two events are compared over the working years?

Which criterion is the most useful to rank a client's insurance needs by priority?

• AThe commission rate paid by the insurer on each product
• BThe product the client has heard about most often in the media
• CThe product with the lowest annual premium among the quotes
• DThe financial impact if the risk occurs and cannot be absorbed

How severe is the loss compared with the client's resources?

Which three conditions are covered by virtually every critical illness policy and account for most CI claims?

• AAlzheimer's disease, Parkinson's disease and multiple sclerosis, the most frequent claims after age 50
• BType 2 diabetes, rheumatoid arthritis and chronic depression
• CKidney failure, blindness and deafness
• DLife-threatening cancer, heart attack and stroke

Think of the "big three" diagnoses behind most claims.

Ravi has a $200,000 CI policy. It paid him a partial benefit of 10% of the face amount for a coronary angioplasty, and the contract states that partial benefits reduce the face amount. Two years later, he has a heart attack meeting the definition and survives 30 days. How much is paid for the heart attack?

• A$220,000
• B$20,000
• C$200,000
• D$180,000

Check the effect of the partial payment on the face amount.