IFSE Institute Updated LLQP Exam Questions and Answers by taron

A residual benefit in a disability insurance policy provides partial benefits if the insured returns to work in a reduced capacity and suffers a loss of income. Patricia’s income has decreased from $4,000 to $3,000, representing a 25% reduction in income ($1,000 loss out of $4,000). Since her policy provides a residual benefit, she will receive 25% of her original monthly benefit, which is 25% of $2,400, amounting to $600. This is calculated to supplement her reduced earnings, aligning with the guidelines on residual benefits provided by LLQP​.

Comprehensive and Detailed Explanation:

Group insurance premiums are adjusted annually based onclaims experience—the ratio of claimspaid to premiums collected (Chapter 8:Group Plan Specifics). High claims increase premiums.

Option A: Age affects initial rates, not annual adjustments unless specified.

Option B: Correct; claims experience directly drives premium changes.

Option C: Business nature sets initial risk, not yearly changes.

Option D: Commissions are fixed, not tied to claims.

Anvi’s disability insurance policy contains an exclusion related to her boxing activities due to the inherent risks associated with that occupation. Since she has retired from boxing, she may request a re-evaluation of her policy to potentially remove the exclusion. However, this change is likely to involve an underwriting review rather than an automatic premium reduction. Typically, exclusions are added to mitigate specific risks, and removing them may be possible without altering the premium since the overall risk profile has changed, but it does not directly imply a premium decrease. Therefore, the most accurate answer is that the exclusion can be removed, but the premiums will remain the same​​.

Comprehensive and Detailed Explanation:

Credibility rating (20%) reflects the weight given to the group’s claims experience; the remaining 80% (100% - 20%) is based on the standard manual rate (Chapter 8:Group Plan Specifics).

Option A: Incorrect; too low.

Option B: Incorrect; matches credibility, not manual rate.

Option C: Correct; 80%.

Option D: Incorrect; too high.