CII R05 Critical Illness Cover — Questions and Answers
Question 1: Under a typical critical illness policy, when is the sum assured paid?
- Immediately upon diagnosis of any medical condition
- On diagnosis of a specified critical illness that meets the policy definition and after any survival period (Correct answer)
- Only upon the death of the life assured
- At the end of the policy term regardless of health
Correct answer: On diagnosis of a specified critical illness that meets the policy definition and after any survival period
Critical illness cover pays the sum assured on diagnosis of a specified illness that meets the exact policy definition, subject to any survival period (typically 14-28 days). The claimant must survive this period for the claim to be valid. Not all medical conditions are covered — only those specifically listed in the policy.
Question 2: The Association of British Insurers (ABI) model definitions for critical illness cover include a core set of conditions. Which of the following is included in the ABI core conditions?
- Chronic fatigue syndrome
- Cancer (excluding less advanced cases) (Correct answer)
- Type 2 diabetes
- Carpal tunnel syndrome
Correct answer: Cancer (excluding less advanced cases)
The ABI Statement of Best Practice includes cancer as one of the core critical illness definitions, though it typically excludes less advanced cancers such as early-stage non-invasive cancers, certain skin cancers, and carcinoma in situ. The ABI core conditions also include heart attack, stroke, and other serious conditions.
Question 3: What is the purpose of the survival period in a critical illness policy?
- To allow the insurer time to invest the premiums
- To ensure the claimant survives for a minimum period after diagnosis before the benefit is paid (Correct answer)
- To give the policyholder time to decide if they want to claim
- To calculate the final bonus payable on the policy
Correct answer: To ensure the claimant survives for a minimum period after diagnosis before the benefit is paid
The survival period (typically 14 or 28 days) requires the claimant to survive for a specified number of days after diagnosis of a critical illness. If the life assured dies within the survival period, the critical illness benefit is not paid, though a separate death benefit may apply if the policy includes life cover.
Question 4: An accelerated critical illness policy differs from a standalone critical illness policy because:
- It covers a wider range of illnesses
- The critical illness benefit is paid in addition to the full death benefit
- A successful critical illness claim reduces or extinguishes the death benefit (Correct answer)
- It provides income replacement rather than a lump sum
Correct answer: A successful critical illness claim reduces or extinguishes the death benefit
Under an accelerated critical illness policy, the critical illness benefit is an advance payment of the death benefit. If a critical illness claim is paid, the death benefit is reduced by the same amount (or extinguished entirely if the full sum assured is claimed). A standalone policy pays the critical illness benefit separately from any death cover.
Question 5: Which of the following would typically NOT be covered under a standard critical illness policy?
- Heart attack
- Major organ transplant
- A stress-related condition such as anxiety (Correct answer)
- Stroke resulting in permanent symptoms lasting more than 24 hours
Correct answer: A stress-related condition such as anxiety
Standard critical illness policies cover defined serious conditions such as heart attack, stroke, cancer, and major organ transplant. Mental health conditions such as stress, anxiety, and depression are not included in critical illness definitions as they do not meet the criteria of life-threatening or permanently debilitating physical conditions.
Question 6: A policyholder has a critical illness policy with a children's cover extension. This benefit typically provides:
- Full sum assured if a child is diagnosed with a covered condition
- A percentage of the main sum assured if a dependent child is diagnosed with a specified critical illness (Correct answer)
- Cover for the child's future loss of earnings
- An annuity payable to the child until age 18
Correct answer: A percentage of the main sum assured if a dependent child is diagnosed with a specified critical illness
Children's critical illness cover is usually included as an extension to the parent's policy. It typically pays a percentage of the main sum assured (often 25% or 50%, up to a maximum amount such as £25,000) if a dependent child is diagnosed with a specified critical illness. The parent's cover continues unaffected after a child's claim.
CII R05 Critical Illness Cover
Under a typical critical illness policy, when is the sum assured paid?