May 2014 Release - URE and KPI Training Competency Test

1.

1 point

What changes have been made to the annual income questions in LC+?

Only the current annual income is requested for all employees applying for indemnity IP applications

Only the current annual income is requested for all IP applications

Only the current annual income is requested for all indemnity IP applications

2.

1 point

What are all the terms available in LC+ for the pastime of amateur outdoor soccer for white collar & blue collar workers?

+25% for white collar and 90day wait excl for blue collar

Std for white collar and +25% for blue collar

Std for all occupation categories

Std for white collar and either +25% loading or 90day exclusion for blue collar

3.

1 point

A person performing home duties and working less than 20hrs per week can now apply for Home Duties IP.

True

False

4.

1 point

Why have changes been made to the hypertension and skin lesion questionnaires in LC+?

To increase cleanskin rates

To reduce cleanskin rates

To provide better data collection for the underwriter to make a decision based on our One touch philosophy

To annoy the client by asking more questions

5.

1 point

What changes have been made to the financial requirements/rules in LC+?

Financial Questionnaire or SOA for IP applications with a monthly benefit above $20k and Financial Questionnaire for all KPI’s

Letter from employer as alternative to PTR’s for employees

Multiples of income consistent with the adviser guide

All of the above

6.

1 point

A financial questionnaire received for a keyperson employee application does not replace the need for a letter from employer under financial mandatory requirements for KPI and any concurrent IP applications.

True

False

7.

1 point

Which P&L item do you use when calculating the monthly benefit for KPI polices?

Adjusted net profit

Expenses

Gross revenue, before Cost of Goods Sold

Gross operating profit (Gross revenue less Cost of Goods Sold), excluding profit from sale of assets, subsidies or interest.

8.

1 point

Which of the following sets of eligibility criteria is most correct for KPI?

Business traded at a profit for the last 2 yrs, maximum 3 key persons in the business, no more than 20 employees

The insured is part of a small business or is a sole trader

Business traded at a profit in the last year, less than 20 employees and max 3 business owners in the business

None of the above

9.

1 point

Billy Bob owns 70% of the business & contributes 60% of the gross profit. Mary Lou owns 30% & contributes 40% of gross profit. What percentage of gross profit do you use to calculate the KPI benefit under keyperson owner for each life insured?

50% & 30%

60% & 40%

70% & 30%

10.

1 point

Kate owns 80% of her business. She has a silent partner who owns the other 20%. Kate is eligible to apply for KPI business owner insurance.

True

False

11.

1 point

Waldo owns 65% of the business & contributes approx 60% of the revenue. As a result there will be ongoing income due to other owners and employees being able to maintain some of the revenue if he was disabled. Which decision is correct in regards to ongoing income for Waldo’s KPI insurance?

Decline policy

Apply ongoing income clause

Reduce monthly benefit offered by the ongoing income

Accept the full monthly benefit based on 50% of gross profit

12.

1 point

To celebrate the 25 years of business operation, Fred awarded each of his employees with more than 15 years service a 1% share in the business. James, who is contract manager and generates 30% of business revenue and gross profit was one of those employees. Can James be covered as a key person employee under KPI?

Yes – as his small share wouldn’t give him control or major decision making powers in the business direction and management. He can still be considered an ‘arm’s length’ employee.

No – as he has ownership in the business

13.

1 point

When do we need to issue revised terms for KPI covering a key person employee?

When the Key Person Factor (KPF) is less than 150%

On indemnity contracts for keyperson employees if we reduce the monthly benefit and/or the final decision is substandard or on altered terms.

On all indemnity contracts for keyperson employees because of the KPF endorsement

14.

1 point

A keyperson owner cannot have agreed value on KPI.

True

False

15.

1 point

A keyperson employee to be insured under a KPI policy has a concurrent IP policy. What does this mean for the KPI cover?

The KPI policy is unaffected, the full KPI monthly benefit based on gross profit is allowable

The KPI benefit must be reduced by the income protection benefit

The waiting period on IP must be at least 1 year

An offset clause for the IP will be applied to the KPI policy

16.

1 point

What is the mandatory requirement for all KPI applications

Letter from employer

Financial questionnaire or SOA

Financial questionnaire

Profit & loss accounts

17.

1 point

Which of the following is not eligible to be insured under KPI?

Key person business owner who operates as a sole trader and generates 100% of the gross business profit.

Key person business owner who contributes 25-75% of the gross business profit

Key person business owner with 25 – 75% ownership in the key person business

Arm’s length Key person employee who contributes 25-100% of the gross business profit

18.

1 point

What are the options available if the insured under KPI is a keyperson owner and has a concurrent application for income protection with BT.
i. Full KPI benefit and full IP benefit allowed with a 1 year waiting period for IP
ii. Reduce the allowable KPI monthly benefit by the income protection benefit
iii. Decline income protection because it is not available with concurrent KPI
iv. Full KPI benefit and full IP benefit allowed with a 30 or 90 day waiting period for income protection.

i and iv

i and ii

ii and iv

iii only

19.

1 point

Which of the following requirements apply for KPI to be considered for a C category occupation?

Occupation is a specialised trade or requires specialised skills

Pre-assessment by underwriting

All of the above

None of the above

20.

1 point

Where KPI and income protection are applied for concurrently, mandatory medical requirements are based on which of the following?

The KPI benefit if the income protection has a 1 year waiting period

The higher of the two monthly benefits

The sum of the KPI and income protection monthly benefits if the income protection has a waiting period of less than 1 year.

The sum of the KPI and income protection monthly benefits