Accident and Sickness Insurance Mock Exam 1 Questions with Correct Answers Latest
Update 2025-2026
Rhonda and Karl are equal partners of an accounting business. Their business is currently worth
$3,000,000, and their annual business expenses are $240,000. They share the business
expenses equally. The couple wants to have a buy-sell agreement in place in the event that one
of them is disabled for more than one year. Rhonda and Karl also state that they are each
responsible for 50% of their clients. If one of them were to become disabled, the clients would
move over to another accounting business. This would lead to a loss of revenue as the business
is totally dependent on their expertise in accounting to generate revenue.
Which of the following recommendations best meets the couple's needs?
a) Purchase a $3,000,000 disability buyout policy on each of their lives and a business overhead
expense policy of $10,000 per month on each of them
b) Purchase a $3,000,000 disability buyout policy on each of their lives a - Answers (corrct)
Purchase a $1,500,000 disability buyout policy on each of their lives and a business overhead
expense policy of $10,000 per month on each of them
Rationale:
Rhonda and Karl each own $1,500,000 of the business and are liable for $10,000 per month of
the business expenses. (Refer to Section 5.4)
Vince is helping his client, Charlie complete an application for a disability policy. Charlie claims
that she is a non-smoker, yet she smells mildly of cigarettes. Vince is willing to give Charlie the
benefit of the doubt until she reaches into her purse to take out her driver's license as proof of
address, and he catches a glimpse of a pack of cigarettes.
What should Vince do under the circumstances?
,a) Add a comment in the agent's comment section
b) Tell the client that she is lying about her smoking status
c) Order a medical exam to determine the client's smoking status
d) Order an inspection report to determine the client's tobacco usage - Answers (correct) Add a
comment in the agent's comment section
Rationale:
The agent's comment section is a useful tool that ensures the company possesses all the
information that the agent is privy to. (7.2.2.1)
Tina purchases a disability insurance policy on the advice of her aunt. Her insurance
representative convinces Tina to add an inexpensive rider to the policy which guarantees her a
daily cash benefit of $100 to cover expenses incurred as the result of hospitalization, such as
babysitting or daycare.
What rider does Tina have on her disability policy?
a) First day hospitalization rider
b) Hospital indemnity rider
, c) Waiver of premium rider
d) Hospital expenses rider - Answers (wrong) Hospital expenses rider
Rationale:
The hospital indemnity rider provides a daily benefit between $50 and $250 a day to cover
expenses incurred as a consequence of hospitalization. (Refer to Section 2.2.4.9)
Albert fell down a staircase and fractured his leg. He was immobilized for three months as his
leg was in a cast. He received disability benefits from his individual disability policy for two
months following the waiting period of one month. He had creditor disability insurance on his
credit card, but the credit card company did not consider Albert disabled.
What definition of disability governed his creditor disability insurance?
a) Own occupation
b) Regular occupation
c) Any occupation
d) Total disability - Answers (correct) Total disability
Rationale:
Total disability is the definition used by CPP. It defines total disability as the inability to perform
the functions of any occupation for which the insured is suited by education or experience. It
also entails that the insured will never recover and be able to return to employment and, in fact,
Update 2025-2026
Rhonda and Karl are equal partners of an accounting business. Their business is currently worth
$3,000,000, and their annual business expenses are $240,000. They share the business
expenses equally. The couple wants to have a buy-sell agreement in place in the event that one
of them is disabled for more than one year. Rhonda and Karl also state that they are each
responsible for 50% of their clients. If one of them were to become disabled, the clients would
move over to another accounting business. This would lead to a loss of revenue as the business
is totally dependent on their expertise in accounting to generate revenue.
Which of the following recommendations best meets the couple's needs?
a) Purchase a $3,000,000 disability buyout policy on each of their lives and a business overhead
expense policy of $10,000 per month on each of them
b) Purchase a $3,000,000 disability buyout policy on each of their lives a - Answers (corrct)
Purchase a $1,500,000 disability buyout policy on each of their lives and a business overhead
expense policy of $10,000 per month on each of them
Rationale:
Rhonda and Karl each own $1,500,000 of the business and are liable for $10,000 per month of
the business expenses. (Refer to Section 5.4)
Vince is helping his client, Charlie complete an application for a disability policy. Charlie claims
that she is a non-smoker, yet she smells mildly of cigarettes. Vince is willing to give Charlie the
benefit of the doubt until she reaches into her purse to take out her driver's license as proof of
address, and he catches a glimpse of a pack of cigarettes.
What should Vince do under the circumstances?
,a) Add a comment in the agent's comment section
b) Tell the client that she is lying about her smoking status
c) Order a medical exam to determine the client's smoking status
d) Order an inspection report to determine the client's tobacco usage - Answers (correct) Add a
comment in the agent's comment section
Rationale:
The agent's comment section is a useful tool that ensures the company possesses all the
information that the agent is privy to. (7.2.2.1)
Tina purchases a disability insurance policy on the advice of her aunt. Her insurance
representative convinces Tina to add an inexpensive rider to the policy which guarantees her a
daily cash benefit of $100 to cover expenses incurred as the result of hospitalization, such as
babysitting or daycare.
What rider does Tina have on her disability policy?
a) First day hospitalization rider
b) Hospital indemnity rider
, c) Waiver of premium rider
d) Hospital expenses rider - Answers (wrong) Hospital expenses rider
Rationale:
The hospital indemnity rider provides a daily benefit between $50 and $250 a day to cover
expenses incurred as a consequence of hospitalization. (Refer to Section 2.2.4.9)
Albert fell down a staircase and fractured his leg. He was immobilized for three months as his
leg was in a cast. He received disability benefits from his individual disability policy for two
months following the waiting period of one month. He had creditor disability insurance on his
credit card, but the credit card company did not consider Albert disabled.
What definition of disability governed his creditor disability insurance?
a) Own occupation
b) Regular occupation
c) Any occupation
d) Total disability - Answers (correct) Total disability
Rationale:
Total disability is the definition used by CPP. It defines total disability as the inability to perform
the functions of any occupation for which the insured is suited by education or experience. It
also entails that the insured will never recover and be able to return to employment and, in fact,
