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Foran LLQP Examination Multiple-Choice Exam-Writing Strategies

Before taking your LLQP Examination:

  • Work on your understanding of the LLQP material.
  • Study in four-hour blocks of time.
  • Review the learning objectives for the LLQP materials. This will help you predict the LLQP exam questions.
  • Think of your exam as a game requiring you to use good strategies based on your knowledge. Sometimes we need to make serious work into a game to ease our stress.
  • Dress for your exam as you studied. It may help you become more relaxed.

Questions

Below are some multiple-choice questions dealing with disability insurance from Modules 3 and 4 for you to answer.

1. John is self-employed as a book editor. Last year he earned $120,000 before business expenses. His business expenses were $25,000. He paid $23,000 in income taxes and was in the 26% average tax bracket. John is a healthy 35 years old. He feels he needs some disability insurance to protect his income should he become disabled. The insurance company’s maximum monthly disability coverage is 66 2/3 %. What is the maximum monthly disability coverage John may buy?

  1. $ 5,278
  2. $ 6,667
  3. $ 4,000
  4. $ 5,390

2. Erin works as a customer service manager for a large telephone company. She supervises a staff of 35 employees. She made $80,000 yearly or $6,667 monthly. Erin’s company has excellent group benefits. Her group long-term disability (LTD) plan at work has a presumptive clause. Her definition for disability is a regular occupation definition for the first two years of disability and any occupation definition thereafter to age 65. Erin was on a camping trip with friends when she was mauled by a bear. She survived the attack but lost her hearing permanently due to the attack. She went on disability. Her plan pays 70% of her pre-disability income if unable to go to work through a disability. After spending 26 months on full disability recovering from her ordeal, Erin agrees to work for her company part time from her home. She can no longer be the manager of her department. She uses her computer to answer customer service enquiries and earns reduced income of $3,500 monthly. What is the monthly disability benefit, if any, that she is entitled to receive?

  1. $4,667
  2. $2,217
  3. $1,167
  4. None

3. Rocco, a commissioned sales representative, has a $5,000 monthly disability income benefit plan with a residual rider. His $5,000 benefit represents 66 2/3% of his pre-disability income. He surfers a heart attack and goes on disability claim. After six months of rehabilitation, his doctor give him permission to return to work, but Rocco can only earn $4,000 of his pre-disability income. What is his residual benefit, if any?

  1. $ 1,000
  2. $ 3,499
  3. $ 2,333
  4. None

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Answers

1. – a. $5,278

Rationale: Total income less business expenses of $25,000 = $95,000. The insurance company will underwrite his income for disability after his business expenses have been deducted but before his income taxes. The $95,000 is then divided by 12 and multiplied by 66 2/3% or .6667. This allows for $5,278 of monthly disability coverage.

Reference: Module 3

2. – a. $4,667 ($6,667 x 70% = $4,667)

Rationale: Full benefit is paid because of the presumptive clause.

Reference: Modules 3 and 4

3. – c. $2,333

Rationale: Rocco pre-disability income is approximately $7,500 monthly ($5,000/.667 = $ 7,496). Residual is based on income lost because of the disability divided by the pre-disability income multiplied by the benefit ($3,500 / $7,500 x $5,000 = $2,333 residual benefit).

Reference: Module 3

All the best for success in writing your LLQP exams.

Doug Planche, F.L.M.I., CFP, CLU, CH.F.C.
Senior Vice President
Foran Financial Institute

Doug Planche is the instructor for the Foran LLQP 4-Day Exam Preparation Seminars. For information on the Foran LLQP seminars, please contact Foran Financial Institute at 1-800-565-0374 or visit  www.foranfinancial.com.

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Additional study aids

Preparatory Seminars and Practice Exams

LLQP Prep Seminars – A comprehensive four-day classroom-based seminar intended to prepare you for writing the certification and final licence exams: $545+ taxes
Contact Foran Financial at: 416-947-1922 or 1-800-565-0374.

Please contact Advocis Member Services at 1-877-773-6765 for more details.

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