R05 Evolution and ABI minimum standards: free practice questions

1. Question 1 of 5

   What does a critical illness cover policy typically provide?

   Option A: A regular income after a deferred period of incapacityOption B: A lump sum only if the insured dies within the termOption C: A cash lump sum on diagnosis of a specified serious illnessOption D: Reimbursement of private hospital treatment costs

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   The answer is C: A cash lump sum on diagnosis of a specified serious illness

   Critical illness cover pays a lump sum on diagnosis of a specified condition, such as invasive cancer, stroke or heart attack, or on undergoing certain procedures. Income after a deferred period describes income protection.

   Why the other options are wrong

   A

   A regular income after a deferred period describes income protection.

   B

   A lump sum only on death within the term describes term assurance.

   D

   Reimbursing private treatment costs describes PMI.

2. Question 2 of 5

   According to the statistic often quoted to show the need for critical illness cover, how much more likely is someone under 65 to suffer a critical illness than to die?

   Option A: Twice as likelyOption B: Ten times as likelyOption C: Five times as likelyOption D: Three times as likely

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   The answer is C: Five times as likely

   Someone under 65 is said to be five times more likely to suffer a critical illness than to die, which shows why cover for living with serious illness matters.

   Why the other options are wrong

   A

   Twice as likely understates the statistic; it's five times.

   B

   Ten times as likely overstates it; the figure quoted is five times.

   D

   Three times as likely understates the statistic.

3. Question 3 of 5

   Which three conditions must all policies described as critical illness cover include under the ABI requirements?

   Option A: Cancer, heart attack and strokeOption B: Stroke, coma and major organ transplantOption C: Heart attack, kidney failure and deafnessOption D: Cancer, multiple sclerosis and blindness

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   The answer is A: Cancer, heart attack and stroke

   The ABI requires cancer, heart attack and stroke to be covered. Many policies add a much wider list of conditions.

   Why the other options are wrong

   B

   Coma and organ transplant are common extras; stroke alone isn't enough.

   C

   Kidney failure and deafness are common extras, not core conditions.

   D

   Multiple sclerosis and blindness are often covered, but they aren't core conditions.

4. Question 4 of 5

   What is the current name of the ABI's critical illness guidance, last updated in April 2023?

   Option A: ABI Guide to Minimum Standards for Critical Illness CoverOption B: ABI Critical Illness Claims CharterOption C: ABI Code of Conduct for Protection SalesOption D: ABI Statement of Best Practice for Critical Illness Cover

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   The answer is A: ABI Guide to Minimum Standards for Critical Illness Cover

   The Statement of Best Practice has been replaced by the ABI Guide to Minimum Standards for Critical Illness Cover. Insurers must meet these standards for a product to be described as critical illness cover.

   Why the other options are wrong

   B

   There's no ABI Critical Illness Claims Charter by that name.

   C

   There's no ABI Code of Conduct with that name for critical illness.

   D

   The Statement of Best Practice was the old name, since replaced.

5. Question 5 of 5

   Which of the following is NOT something the ABI Guide to Minimum Standards sets out?

   Option A: Common generic termsOption B: Model wordings for illnesses and exclusionsOption C: A single premium rate that all insurers must chargeOption D: A common format for describing cover at the point of sale

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   The answer is C: A single premium rate that all insurers must charge

   The Minimum Standards cover a common format for describing cover, common generic terms and model wordings for illnesses and exclusions. They do not set prices.

   Why the other options are wrong

   A

   The Minimum Standards do set common generic terms.

   B

   The Minimum Standards do provide model wordings for illnesses and exclusions.

   D

   The Minimum Standards do set a common format for describing cover.

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