R05 Factors shaping client needs: free practice questions

1. Question 1 of 5

   Which clients of working age should consider protection against disability that stops them working?

   Option A: Only those with dependent childrenOption B: Only self-employed people without any sick payOption C: Virtually all, whether or not they have dependantsOption D: Only those with a mortgage or other large debts

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   The answer is C: Virtually all, whether or not they have dependants

   Loss of earnings through disability affects anyone who relies on their income, so virtually all working-age clients should consider it, regardless of dependants.

   Why the other options are wrong

   A

   Anyone relying on their income needs to consider it, not just parents.

   B

   Employees can still lose income once sick pay runs out.

   D

   A mortgage adds to the need, but anyone who relies on earnings has one.

2. Question 2 of 5

   After divorcing, Ben must pay maintenance to his former wife Cara. Can Cara take out a policy on Ben's life?

   Option A: Yes, because the maintenance obligation creates an insurable interestOption B: Only if the policy is written in trust for their childrenOption C: Yes, but only if Ben gives his written consent each yearOption D: No, former spouses never have an insurable interest in each other

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   The answer is A: Yes, because the maintenance obligation creates an insurable interest

   Former spouses do not automatically have an insurable interest in each other, but an obligation to pay maintenance creates one, so Cara can insure the maintenance she would lose on Ben's death.

   Why the other options are wrong

   B

   A trust isn't what creates the interest; the maintenance does.

   C

   No annual written consent is needed; her insurable interest comes from the maintenance.

   D

   Former spouses don't automatically have an insurable interest, but a maintenance obligation creates one.

3. Question 3 of 5

   Why should protection plans that allow for caring responsibilities be reviewed regularly?

   Option A: Insurers cancel policies for carers after five yearsOption B: Carers are not allowed to hold protection policies in their own nameOption C: Caring responsibilities change frequently as people start or stop caringOption D: State benefits for carers are fixed for life

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   The answer is C: Caring responsibilities change frequently as people start or stop caring

   Caring responsibilities are not static. An estimated two million people become carers each year and a similar number stop, so plans need to reflect current circumstances.

   Why the other options are wrong

   A

   Insurers don't cancel policies because the holder is a carer.

   B

   Carers can hold protection policies.

   D

   Carers' benefits aren't fixed for life.

4. Question 4 of 5

   Which of the following is NOT one of the four drivers of vulnerability identified by the FCA?

   Option A: HealthOption B: ResilienceOption C: NationalityOption D: Life events

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   The answer is C: Nationality

   The four drivers are health, life events, resilience and capability. Vulnerability can involve several drivers at once and can change over time.

   Why the other options are wrong

   A

   Health is one of the FCA's four drivers of vulnerability.

   B

   Resilience is one of the FCA's four drivers of vulnerability.

   D

   Life events are one of the FCA's four drivers of vulnerability.

5. Question 5 of 5

   Finn is a full-time homemaker caring for young children and has no earnings. Why might he still need protection?

   Option A: He will receive a large State pension immediately on becoming illOption B: His death or disability could bring big extra costs, such as childcareOption C: His partner's employer will pay for all childcare costs if neededOption D: Homemakers cannot be insured, so no protection need exists

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   The answer is B: His death or disability could bring big extra costs, such as childcare

   The loss of a homemaker can lead to substantial extra costs for childcare and running the home. These should be discussed and insured, taking into account any relatives who could help.

   Why the other options are wrong

   A

   He won't receive a large State Pension immediately.

   C

   His partner's employer won't pay for all childcare.

   D

   Homemakers can be insured.

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