R05 CIC claims: free practice questions

1. Question 1 of 5

   On a critical illness claim, who has the onus of proving that the claim is payable?

   Option A: The policyholderOption B: The insurerOption C: The Financial Ombudsman ServiceOption D: The policyholder's GP

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   The answer is A: The policyholder

   The policyholder must prove the claim with appropriate medical evidence, which may be at their own expense depending on the policy terms.

   Why the other options are wrong

   B

   The insurer checks the claim, but the policyholder must prove it.

   C

   The Ombudsman handles complaints; it doesn't carry the burden of proof.

   D

   The GP provides evidence, but the onus is on the policyholder.

2. Question 2 of 5

   Why are critical illness contracts sometimes criticised as being 'underwritten twice'?

   Option A: Disclosure and medical facts are checked at application and at claimOption B: The policyholder must reapply and be underwritten after five yearsOption C: Two separate insurers must each accept the risk before cover startsOption D: Premiums are charged twice over during the first year of cover

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   The answer is A: Disclosure and medical facts are checked at application and at claim

   Insurers review disclosure, definitions and pre-existing conditions at claim as well as at proposal. The industry says this protects all policyholders.

   Why the other options are wrong

   B

   Policyholders don't have to reapply after five years.

   C

   It doesn't mean two insurers accept the risk.

   D

   Premiums aren't charged twice.

3. Question 3 of 5

   An insurer finds that a critical illness claimant deliberately concealed a heart condition at application, knowing it was relevant. What can the insurer do?

   Option A: Void the contract, refuse all claims and often keep the premiumsOption B: Pay a reduced claim in proportion to the premium that should have been paidOption C: Continue cover but increase all future premiumsOption D: Pay the claim in full, as the premiums were paid

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   The answer is A: Void the contract, refuse all claims and often keep the premiums

   For a deliberate or reckless qualifying misrepresentation under CIDRA 2012, the insurer may void the contract, refuse all claims and often keep the premiums.

   Why the other options are wrong

   B

   A proportionate reduction is for careless misrepresentation; this was deliberate.

   C

   Deliberate misrepresentation lets the insurer void the contract, not just raise premiums.

   D

   Paying premiums doesn't protect a policyholder who deliberately concealed a relevant condition.

4. Question 4 of 5

   Tara carelessly failed to disclose a condition. Her premium was £40 a month, but with full disclosure it would have been £50. She makes a valid £100,000 claim unrelated to any exclusion. Under a proportionate remedy, how much would be paid?

   Option A: £60,000Option B: £100,000Option C: £80,000Option D: £75,000

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   The answer is C: £80,000

   Where the insurer would have charged a higher premium, the claim is reduced in proportion to the premium actually charged: £40 ÷ £50 = 80%, so 80% × £100,000 = £80,000.

   Why the other options are wrong

   A

   £60,000 is 60%; the claim is reduced to 80%, which is £80,000.

   B

   A careless misrepresentation means the claim is reduced in proportion to the premium charged.

   D

   £75,000 is 75%; the proportion is £40 ÷ £50 = 80%.

5. Question 5 of 5

   Once a valid critical illness claim is accepted, how is the benefit usually paid under an individual policy?

   Option A: As a lump sum, subject to any survival periodOption B: As a monthly income until the claimant recoversOption C: Directly to the insured's hospitalOption D: As a refund of premiums paid

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   The answer is A: As a lump sum, subject to any survival period

   An individual critical illness policy pays a lump sum on diagnosis of a covered condition, subject to any survival period, unless it is one of the few instalment-based designs.

   Why the other options are wrong

   B

   A monthly income until recovery describes income protection.

   C

   Benefit is paid to the policyholder, not the hospital.

   D

   A refund of premiums isn't a claim payment.

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