CII R05 Critical Illness and Income Protection — Questions and Answers
Question 1: Which of the following is NOT typically covered by a standard critical illness policy?
- Heart attack
- Stroke
- Broken leg (Correct answer)
- Cancer
Correct answer: Broken leg
Critical illness policies cover specified serious, life-threatening conditions such as heart attack, stroke, and cancer. Minor injuries like a broken leg are not included.
Question 2: What does 'activities of daily living' (ADLs) assess in the context of long-term care and some protection policies?
- The claimant's ability to perform physical tasks such as washing, dressing, and eating (Correct answer)
- The claimant's employment history
- The claimant's investment objectives
- The claimant's mortgage repayment ability
Correct answer: The claimant's ability to perform physical tasks such as washing, dressing, and eating
ADLs are used to assess functional ability — typically six activities: washing, dressing, eating, mobility, continence, and transferring. Inability to perform a specified number triggers care-related benefits.
Question 3: Under a critical illness policy, what is meant by a 'moratorium period'?
- The period after diagnosis before the lump sum is paid
- The period at the start of the policy during which no claims for pre-existing conditions will be paid (Correct answer)
- The period of time over which premiums are calculated
- The duration of the policy term
Correct answer: The period at the start of the policy during which no claims for pre-existing conditions will be paid
A moratorium period (typically 1–2 years at policy inception) excludes claims arising from pre-existing conditions that the policyholder had symptoms of before the policy started.
Question 4: Which definition of disability requires the policyholder to be unable to perform a specified number of Activities of Daily Living to qualify for benefit?
- Own occupation definition
- Any occupation definition
- ADL definition (Correct answer)
- Suited occupation definition
Correct answer: ADL definition
The ADL definition bases disability on an inability to perform a certain number of activities of daily living (e.g., 3 out of 6), rather than linking benefit to an occupation.
Question 5: A 35-year-old non-smoker purchases critical illness cover with a 30-year term. Which factor would most significantly increase the premium?
- Choosing a longer deferred period
- Adding waiver of premium (Correct answer)
- Choosing the own occupation definition
- Opting for guaranteed insurability
Correct answer: Adding waiver of premium
Waiver of premium adds the cost of covering premium payments during disability to the base premium, increasing overall cost. A longer deferred period would reduce (not increase) premiums on income protection, not critical illness.
Question 6: What is the primary reason critical illness claims are sometimes declined?
- The policyholder survives for more than 14 days after diagnosis
- The condition does not meet the specific policy definition of that illness (Correct answer)
- The policyholder fails to pay the first premium
- The sum assured is below £50,000
Correct answer: The condition does not meet the specific policy definition of that illness
Critical illness claims are most commonly declined because the diagnosed condition does not meet the precise definition stated in the policy. For example, early-stage cancers may not qualify under the policy wording.
CII R05 Critical Illness and Income Protection
Which of the following is NOT typically covered by a standard critical illness policy?