PDF LLQP Study Guide

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:

“Any occupation” disability insurance pays benefits only if the insured cannot work inanyjob for which they are reasonably suited by education, training, or experience. For a dentist like Pierre-Marc, whose substantial income relies on specialized skills, this is restrictive. “Own occupation” coverage pays if he cannot perform his specific job (dentistry), even if he can work elsewhere (Chapter 2:Insurance to Protect Income).

Option A: Incorrect; “any occupation” is less flexible, not more, and doesn’t pay if he can work elsewhere, regardless of choice.

Option B: Incorrect; benefits stop if he can work elsewhere, whether he chooses to or not.

Option C: Incorrect; an AD&D rider addresses specific losses, not income replacement adequacy.

Option D: Correct; “own occupation” suits his high-income, specialized profession, ensuring benefits if he can’t practice dentistry, even if he takes another job.

Comprehensive and Detailed Explanation:

Key person insurance pays $5,000/month for 12 months max (total $60,000) after a 60-day wait. Replacement expense rider pays $2,500/month during replacement (6 months = $15,000). Total: $5,000 × 10 months (post-wait) = $50,000 + $15,000 = $65,000 (Chapter 5:Insurance to Protect Businesses).

Option A: Incorrect; overestimates.

Option B: Correct; $65,000.

Option C-D: Incorrect; underestimates.

Most individual disability insurance policies include atwo-year incontestability clause, after which the insurer cannot deny claims due to misrepresentations on the application, unless they involve fraud. Since Laekyn’s policy was purchased over three years ago, and assuming there was no fraudulent application, she should be eligible for benefits. The fact that her disability is related to a suicide attempt is not an automatic disqualification beyond this period unless specifically excluded by the policy. Therefore, the insurer should process her claim under the standard disability terms of the policy​​.