CII R05 Group Insurance Schemes

Question 1

What is 'free cover limit' in a group life assurance scheme?

Accepted Answer

The level of benefit below which individual medical underwriting is not required

Answer

The free cover limit is the maximum benefit that can be provided to an individual group scheme member without the need for individual medical underwriting. Members with benefits above this limit require individual evidence of health.

Question 2

Under a group death-in-service scheme, benefits are expressed as a multiple of salary. Which authority sets the maximum allowable multiple?

Accepted Answer

HMRC, under registered pension scheme rules — typically 4 times salary

Answer

Group death-in-service (life assurance) schemes registered as part of an occupational pension scheme are subject to HMRC limits. The maximum tax-free lump sum is 4 times the member's final salary.

Question 3

What is the purpose of a 'master trust' in the context of group life assurance?

Accepted Answer

To provide a pre-established trust structure that employers can use without setting up their own trust

Answer

A master trust is a pre-written discretionary trust arrangement set up and administered by the insurer, allowing employers to have death-in-service benefits paid outside employees' estates without the cost of establishing their own trust.

Question 4

A group income protection scheme has a 'benefit definition' of 'own occupation' for the first two years of claim. What typically happens after two years?

Accepted Answer

The definition switches to 'any occupation' after the initial period

Answer

Many group income protection policies apply own occupation for the first one to two years of a claim (making it easier to qualify), then switch to a broader 'any occupation' definition, making it harder to continue receiving benefit.

Question 5

Which regulation requires employers to provide all employees with access to a qualifying workplace pension scheme?

Accepted Answer

Auto-enrolment legislation under the Pensions Act 2008

Answer

The Pensions Act 2008 introduced auto-enrolment, requiring all employers to automatically enrol eligible employees into a qualifying workplace pension scheme and make minimum contributions.

CII R05 Practice Test

CII R05 Practice Test

CII R05 Group Insurance Schemes