CII R05 Life Insurance Products

Question 1

What is the key difference between a whole of life policy and a term assurance policy?

Accepted Answer

Whole of life guarantees a payout whenever death occurs, whereas term assurance only pays out if death occurs within the policy term

Answer

Whole of life pays out only on death within a specified term

Answer

Term assurance builds up a cash value over time

Answer

Whole of life policies cannot be placed in trust

Question 2

Under a decreasing term assurance policy, which of the following best describes how the sum assured changes over the policy term?

Accepted Answer

It reduces over the policy term, typically to zero by the end

Answer

It increases annually in line with inflation

Answer

It remains level throughout the term

Answer

It decreases only if premiums are missed

Question 3

A family income benefit policy differs from a standard level term assurance because it pays the benefit as:

Accepted Answer

A regular tax-free income from the date of death until the end of the policy term

Answer

A single lump sum on diagnosis of a critical illness

Answer

A lump sum at the end of the policy term regardless of whether a claim is made

Answer

Monthly instalments for a fixed period of 25 years from date of death

Question 4

Which of the following is a characteristic of a unit-linked whole of life policy?

Accepted Answer

The sum assured is linked to the performance of an underlying investment fund

Answer

Premiums are guaranteed never to increase

Answer

The policy has no investment element

Answer

The policy automatically converts to an annuity at age 65

Question 5

What is the primary purpose of a relevant life policy?

Accepted Answer

To provide death-in-service benefits for employees outside of a registered pension scheme

Answer

To provide an employer-funded personal pension

Answer

To replace state bereavement benefits for self-employed individuals

Answer

To fund critical illness cover for company directors only

Question 6

Under a joint life first death policy, when is the benefit paid?

Accepted Answer

On the first death of either life assured

Answer

On the death of the last surviving life assured

Answer

Only if both lives assured die within the policy term

Answer

On the tenth anniversary of the policy