Cover and Legal Protection Test

1.

What is the KEY difference between guaranteed and reviewable critical illness premiums?

Guaranteed premiums are reviewed periodically, whereas reviewable premiums are fixed.

There is no difference in the way premiums are set.

Guaranteed premiums offer a fixed rate benefit in return for a fixed premium, whereas reviewable premiums are reviewed periodically.

Guaranteed premiums are guaranteed only to increase with the morbidity risk whereas, reviewable premiums may increase not only with the morbidity risk but also the provider’s claims and investment performance experience.

2.

Medical advances have allowed for the detection of illnesses much earlier than in previous years. This has led to new definitions of critical illnesses for new policies. True or false?

True

False

3.

Which one of the following options, if any, regarding Income Protection Insurance (IPI) is false?

An IPI policy is 'permanent', in that the insurer does not have the option to cancel it, so long as the insured continues to pay the premiums

None, they are all true.

The benefit continues to be paid until the insured returns to work, dies, or the policy term expires (normally at age 60 or 65).

The amount of benefit insured should be related to the client’s monthly earnings, taking into consideration certain points.

4.

With Income Protection Insurance (IPI), where a change of occupation takes place and the new occupation is different to the original occupation, which of the following is true?

A) The policy has a surrender value
B) The level of cover may be changed in line with the new occupation
C) Certain occupations cannot be covered
D) House-person cover will be applied

A and C only

B and C only

C only

D only

5.

What is the main benefit of increasing term assurance?

It provides a hedge against inflation

It offers the possibility of a terminal bonus on death

It qualifies for life assurance premium relief

It guarantees cover for the whole of the policyholders life

6.

A client dies on 2nd October 2015 without having written a will. He leaves is survived by his parents and spouse and leaves an estate worth £600,000. How are the assets distributed?

All of it goes to his parents

His parents take the first £200,000 plus personal chattels and half the remainder

His spouse takes the whole estate

His spouse takes the first £250,000 with the balance to his parents

7.

Upon receipt of a death certificate, which of the following would the life office normally check to make sure that it is the correct person?

A) Occupation
B) Address
C) Spouse details
D) Place of birth

All of these

A, B, and C only

A, B and D only

B and D only

8.

Which of the following is the MOST suitable type of protection for a repayment mortgage?

Decreasing term assurance

Whole of life assurance

Convertible term assurance

Family income benefits

9.

The sale and marketing of income protection insurance is regulated by which of the following?

PRA if the organisation is large, otherwise by the FCA

FCA

PRA

The ABI

10.

For how long are the benefits of an income protection insurance policy usually paid?

A) Until the policyholder reaches retirement age
B) Until the policyholder dies
C) Until the policyholder recovers
D) Until the end of the policy term

B, C and D only

A, B and D only

B and D only

All / any of these

11.

A ‘menu-style' critical illness cover contract allows clients to:

Choose from a range of additional protection options

Choose whether to attend a medical or not

Choose from a list of conditions they would like to cover

Select any level of cover free of underwriting

12.

Which four exclusions are typical of a critical illness policy and also given in the Association of British Insurer’s (ABI) model definition?

HIV/AIDS, living abroad, self-inflicted injury, coronary artery by-pass surgery

Drug abuse, multiple sclerosis, hazardous sports and pastimes, HIV/AIDS

Aviation, failure to follow medical advice, HIV/AIDS, major organ transplant

Aviation, criminal acts, drug abuse, and failure to follow medical advice Key My Answer My Answer Correct Answer Correct Answer

13.

What is the typical survival period that is usually a condition of a standalone critical illness policy?

14 – 30 days

30 days

14 – 45 days

30 – 45 days

14.

Alongside which of the following policies is terminal illness cover often sold?

Income protection insurance

Term assurance

Critical illness cover

Long term care

15.

Which of the following are diseases that would normally be investigated by an underwriter?

A) Heart & circulatory diseases
B) Childhood illnesses
C) Tropical and respiratory diseases
D) Mental disorders

B, C and D

A, B and C

A, C and D

A, B and D

16.

Which Act states that it is necessary for the life assured to give permission before a doctor can be asked to complete a report?

Data Protection Act

Access to Personal Files and Medical Reports Act

Equality Act

The Access to Medical Reports Act

17.

A man dies leaving his partner to whom he is not married. His only other family is his mother and brother. Who would benefit from his estate if he had not made a will?

All of them would get a share

His partner

His mother

His brother

18.

Why is full fact finding important when recommending a life insurance product.

To collect full information about the customer in order to provide them with suitable advice

To make it clear to the customer which areas are not being considered

To use open and closed questioning

To collect full information relevant only to the area of advice in question

19.

Why is it best practice for firms to implement a clear desk policy?

To ensure that insurance requirements are being met

To ensure that data when not being used, is not accessible to unauthorised individuals

Laptops when not in use can be left on desks, it just relates to paper files being tidied away

Firms don’t have to implement a clear desk policy

20.

What can be considered as 'sensitive data' relating to an individual?

A) An individual's racial or ethnic origin
B) An individual political opinions
C) An individuals National Insurance number
D) An individual's commission or alleged commission by them of any offence

C & D

A, B & D

A & C

A & B