IFSE Institute Updated LLQP Exam Questions and Answers by philip

Harper has aFuture Purchase Option (FPO)rider on her disability insurance policy, which allows her to increase her coverage by a predetermined amount (in this case, $500) without undergoing additional medical underwriting, provided she exercises this option at specific intervals. Given her increased income, Harper wishes to increase her monthly benefit to $5,000. By exercising the FPO, she can automatically add $500 to her current benefit, raising it from $2,500 to $3,000 without medical underwriting. To reach her desired benefit of $5,000, she would need an additional $2,000. For this portion, she would need to go through medical underwriting as it exceeds the FPO amount​​. Thus, option D is correct, as it accurately reflects the process and options available to Harper under the LLQP guidelines for utilizing the FPO rider along with additional underwriting for further increases.

Comprehensive and Detailed Explanation:

Marc earns $60,000/year ($5,000/month), and Veronique earns $15,000/year ($1,250/month), totaling $6,250/month. Their expenses are $3,000/month. As the primary earner, Marc’s disability poses the greatest risk (Chapter 6:Client Profile).

If Marc is disabled: Veronique’s $1,250 + $0 = $1,250, short $1,750 of $3,000.

If Veronique is disabled: Marc’s $5,000 covers $3,000.

$3,000/month for Marc (60% of his income) plus Veronique’s $1,250 totals $4,250, exceeding $3,000.

Option A: Correct; $3,000/month for Marc ensures expenses are met.

Option B: Incorrect; Veronique’s income is supplementary, not primary.

Option C: Excessive; $4,000/month over-insures Marc.

Option D: Incorrect; LTC is for care costs, not income replacement.

Comprehensive and Detailed Explanation:

AD&D pays $50,000 for accidental death. CI ($25,000) requires surviving a 30-day waiting period post-diagnosis (April 20 to May 20); Donald died on April 24, so no CI benefit (Chapter 1:Financial Protection Provided by Accident and Sickness Insurance).

Option A: Incorrect; AD&D applies.

Option B: Incorrect; CI not paid.

Option C: Correct; $50,000 AD&D only.

Option D: Incorrect; CI not triggered.

Since Borealis Fit is a relatively new business with no prior experience data for group insurance, the insurer is likely to use manual rating. This method involves determining premiums based on standard rates for similar groups rather than the specific experience of the group itself. Manual rating is commonly applied when there is no claims history or insufficient data to support a credibility or experience rating. This aligns with LLQP guidelines, which outline manual rating as a default approach for groups without established claims experience​.