CeMAP - Certificate in Mortgage Advice and Practice Advising on Protection Products Questions and Answers

Question 1

A client has a £200,000 capital and interest repayment mortgage over a 25-year term.
They want life insurance to ensure the mortgage is paid off upon their death.
Which type of policy would be the most suitable and cost-effective recommendation to meet this specific need?

Accepted Answer

A Decreasing Term Assurance policy

Answer

A Whole of Life policy

Answer

A Level Term Assurance policy

Answer

An Endowment policy

Question 2

An adviser is discussing Income Protection (IP) with a self-employed client. The client has significant savings that could cover their expenses for six months. How would this information most likely influence the adviser's recommendation?

Accepted Answer

It would allow for a longer deferred period, reducing the premium.

Answer

It would mean Income Protection is not required.

Answer

It would suggest a higher monthly benefit is needed.

Answer

It would require the policy to be written in trust immediately.

Question 3

Which of the following statements BEST describes the key difference between Critical Illness Cover (CIC) and Income Protection (IP)?

Accepted Answer

CIC pays a tax-free lump sum on diagnosis of a specified condition, while IP provides a regular replacement income if the policyholder is unable to work.

Answer

CIC pays a monthly income, while IP pays a one-off lump sum.

Answer

CIC covers any illness that stops you from working, while IP only covers specified conditions.

Answer

CIC is only available with a mortgage, whereas IP is a standalone product.

Question 4

Under the FCA's Consumer Duty, an adviser must 'act to deliver good customer outcomes'. In the context of mortgage protection, what does this primarily require the adviser to do?

Accepted Answer

Discuss and assess the financial risks of death or incapacity, helping the client avoid foreseeable harm.

Answer

Ensure the client buys at least one protection policy with their mortgage.

Answer

Recommend the cheapest policy available regardless of the features.

Answer

Provide the client with a list of insurers and allow them to choose for themselves.

Question 5

A couple are taking out an interest-only mortgage. They require life assurance to repay the capital at the end of the term should one of them die. Which of the following policies would be most suitable for this purpose?

Accepted Answer

Level Term Assurance

Answer

Family Income Benefit

Answer

Decreasing Term Assurance

Answer

Accident, Sickness and Unemployment cover

Question 6

When a client applies for a protection policy, such as life or critical illness cover, they have a duty to disclose all relevant information to the insurer. What is the primary consequence if a client fails to disclose a material fact?

Accepted Answer

The insurer could reject a future claim and declare the policy void.

Answer

The monthly premium will automatically be increased.

Answer

The policy will be converted to a more basic level of cover.

Answer

The Financial Conduct Authority (FCA) will fine the client.