Free IFSE Institute LLQP Practice Exam with Questions & Answers | Set: 6

Comprehensive and Detailed Explanation:

CI requires surviving 30 days post-diagnosis; Sabrina died at 28 days, so no $100,000. The return of premium rider pays premiums back upon death (Chapter 1:Financial Protection Provided by Accident and Sickness Insurance).

Option A: Incorrect; waiting period not met.

Option B: Incorrect; no cash value in CI.

Option C: Correct; rider applies.

Option D: Incorrect; rider triggers payment.

Comprehensive and Detailed Explanation:

Group critical illness (CI) coverage typically ends upon retirement unless a conversion option is explicitly offered, which is rare (Chapter 8:Group Plan Specifics). Eloise needs CI for lump-sum protection and long-term care (LTC) insurance for monthly benefits in an assisted living facility (Chapter 4:Insurance to Protect Savings).

Option A: Incorrect; group CI rarely converts to individual CI, and it doesn’t address LTC needs.

Option B: Partially correct but incomplete; it misses LTC for assisted living.

Option C: Correct; CI ends at retirement, requiring individual CI, and LTC insurance meets her assisted living goal.

Option D: Incorrect; disability insurance replaces income, not CI or LTC benefits.

Anet worth statementassesses an individual’s total financial assets and liabilities, providing insight into their overall financial health. For Ethan, as a freelance photographer, understanding his net worth is essential to determine whether he has sufficient resources to manage unexpected expenses, such as medical costs from a potential emergency. This assessment helps Larry gauge Ethan's ability to withstand financial shocks, which is crucial when planning for accident and sickness insurance coverage​. While cash flow statements provide details on income and expenses, net worth statements are specifically used to evaluate financial resources available for emergencies.

Constantin's primary financial risk remains theloss of income, as his substantial mortgage and recent history of debt accumulation due to a prolonged period of unemployment suggest a potential vulnerability if he were to lose his income again. Despite his current stable income, any future job loss would significantly impact his ability to meet his financial obligations, including mortgage payments, which could lead to another round of financial strain. The LLQP materials highlight that maintaining a stable income is crucial, particularly for individuals with high financial responsibilities, such as a mortgage​. Although other risks like unexpected expenses, debt, and a lower standard of living are relevant, the direct consequence of losing his income would exacerbate these risks, making income loss the most critical concern.

Emery is a non-income earning individual, as she is a stay-at-home mother and volunteer. Traditional disability insurance policies, likeGuaranteed RenewableorCancellable policies, typically require proof of income and are generally issued to individuals who can demonstrate earned income. However,Non-traditional disability insurance policiesare often designed for individuals without a conventional source of earned income, such as homemakers, who may still wish to secure coverage against the potential loss of the ability to perform daily tasks due to disability​.

Non-traditional policies may offer benefits that help cover the costs associated with hiring help or obtaining services that Emery could no longer provide if disabled. These types of policies acknowledge that a disability could impact Emery’s ability to care for her family, even though she does not earn a regular income. Therefore, option C is the best answer, as it aligns with the LLQP guidelines that recognize the suitability of non-traditional disability policies for individuals like Emery who have significant responsibilities but no formal income​.

Disability insurance benefits can be subject tointegrationoroffset provisions, especially if multiple sources of DI coverage exist. These provisions prevent the insured from receiving a total disability benefit amount that exceeds a certain percentage of pre-disability income. Vladimir should inform Vanessa that her benefits might be adjusted to avoid over-insurance and to align with her income levels. This aligns with the LLQP materials, which emphasize that overlapping coverage sources may lead to reductions in benefits from one source to maintain proportionality with earned income​.

Comprehensive and Detailed Explanation:

Business loan protection disability insurance covers loan payments if the owner is disabled, directly addressing Eric’s need (Chapter 5:Insurance to Protect Businesses).

Option A: Incorrect; protects business operations.

Option B: Incorrect; covers overhead, not loans.

Option C: Incorrect; for buy-sell agreements.

Option D: Correct; targets loan payments.

Comprehensive and Detailed Explanation:

As a self-employed architect, Dorothy needs disability income protection (60% of $125,000 = $75,000/year or $6,250/month) for personal expenses and business overhead expense (BOE) insurance to cover fixed costs (e.g., assistants’ salaries, rent) during disability (Chapter 5:Insurance to Protect Businesses).

Option A: Incomplete; ignores business costs.

Option B: Unrealistic; insurers cap at 60-75%.

Option C: Incomplete; misses personal income.

Option D: Correct; covers both personal and business needs.

Typically, when associations like the Alberta Engineering Association offer group insurance plans, these plans arevoluntary, and members are generally responsible for paying the full premium. This arrangement is common in association group plans, where membership is optional, and individuals must choose to opt in and pay their share. The LLQP materials outline that association-sponsored group plans often work this way unless otherwise specified, as there is no indication that the association shares in the premium costs​​.

Comprehensive and Detailed Explanation From Exact Extract:

After the 2-year contestability period, the insurer must prove fraudulent misrepresentation to void the policy. The LLQP confirms that beyond this period, policies are generally incontestable unless intentional fraud is demonstrated. Gerard’s case does not involve fraud, and thus the policy stands.