CII R05 Critical Illness Cover 2

Question 1

Under CII R05, what is meant by a 'total and permanent disability' (TPD) definition within a critical illness policy?

Accepted Answer

A definition that covers the inability to perform one's own occupation or any occupation, depending on the policy wording, on a permanent basis

Answer

The inability to perform any paid work whatsoever for a minimum of 6 months

Answer

A temporary inability to work due to an accident

Answer

A disability that must be reassessed every 12 months by the insurer

Question 2

A client is considering critical illness cover and asks about 'additional payment' conditions. What are these?

Accepted Answer

Less severe conditions that trigger a smaller partial payment, separate from the main sum assured

Answer

Conditions that trigger a full second payout equal to the original sum assured

Answer

Conditions that only apply after the policy has been in force for 10 years

Answer

Conditions that are only payable if the policyholder is over age 60

Question 3

Which of the following is a key advantage of a standalone critical illness plan over an accelerated plan?

Accepted Answer

A standalone plan preserves the full death benefit even after a critical illness claim

Answer

Standalone plans are always cheaper

Answer

Standalone plans cover more conditions

Answer

Standalone plans do not require a survival period

Question 4

A critical illness policy may include a 'waiver of premium' benefit. What does this provide?

Accepted Answer

Continued policy cover without the need to pay premiums if the policyholder is unable to work due to incapacity

Answer

A refund of all premiums paid if no claim is made

Answer

An automatic increase in the sum assured each year

Answer

A reduction in premiums after the policy has been in force for five years

Question 5

In the context of critical illness cover, what does 'indexation' mean?

Accepted Answer

The sum assured and premiums increase annually, typically in line with RPI or a fixed percentage, to maintain the real value of cover

Answer

The sum assured is adjusted downwards each year to reflect deflation

Answer

The policy is automatically cancelled if premiums are not paid by the indexed date

Answer

The policyholder receives an annual index of all conditions covered

Question 6

A policyholder diagnosed with early-stage prostate cancer makes a claim on their critical illness policy. The insurer declines the claim. What is the most likely reason?

Accepted Answer

The cancer may not meet the policy's definition, which typically excludes early-stage or low-grade cancers

Answer

Prostate cancer is never covered under any critical illness policy

Answer

The policyholder did not wait 12 months after taking out the policy

Answer

Critical illness policies only cover female cancers