R05 Group critical illness cover: free practice questions

1. Question 1 of 5

   What normally happens to an employee's group critical illness cover when they leave the employer?

   Option A: It continues until retirement ageOption B: It ceases on leaving serviceOption C: It pays out a surrender valueOption D: It converts to income protection

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   The answer is B: It ceases on leaving service

   Group critical illness cover, whether a fixed amount or a multiple of salary, ends on leaving service or retirement.

   Why the other options are wrong

   A

   Group cover depends on employment, so it doesn't continue to retirement after leaving.

   C

   Group critical illness cover has no surrender value.

   D

   It doesn't convert to income protection.

2. Question 2 of 5

   How do group critical illness claims typically differ from most individual critical illness claims?

   Option A: Group claims are only paid on the death of the employeeOption B: Group claims usually require survival of 30 days after diagnosisOption C: Group claims are paid as a monthly income rather than a lump sumOption D: Group claims are paid with no exclusions of any kind

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   The answer is B: Group claims usually require survival of 30 days after diagnosis

   Most individual cover is an acceleration of life cover, so death also pays. Group cover is usually stand-alone and pays only if the employee survives 30 days after diagnosis.

   Why the other options are wrong

   A

   Group critical illness pays on diagnosis and survival, not on death.

   C

   Group claims are lump sums, not monthly income.

   D

   Group schemes usually exclude pre-existing conditions.

3. Question 3 of 5

   Which statement about underwriting and conditions under group critical illness cover is correct?

   Option A: Group schemes cover far fewer illnesses than individual policiesOption B: Underwriting is reduced and pre-existing conditions are usually excludedOption C: Pre-existing conditions are always covered in fullOption D: Every member must have a full medical examination before cover starts

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   The answer is B: Underwriting is reduced and pre-existing conditions are usually excluded

   Group critical illness cover generally covers the same illnesses as individual policies, with reduced underwriting and pre-existing conditions usually excluded.

   Why the other options are wrong

   A

   Group schemes generally cover the same illnesses as individual policies.

   C

   Pre-existing conditions are usually excluded.

   D

   Group schemes don't require full examinations for every member.

4. Question 4 of 5

   Why can group critical illness cover be attractive to employees who would not normally buy cover individually?

   Option A: It automatically covers mental health conditionsOption B: It continues after they leave the companyOption C: The benefit is guaranteed to be tax-free in all casesOption D: Reduced underwriting makes it simpler to obtain

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   The answer is D: Reduced underwriting makes it simpler to obtain

   Simplified underwriting makes group cover easy to take up. It can also help employees feel valued, although it is now more commonly paid for by the employee.

   Why the other options are wrong

   A

   Mental health conditions aren't automatically covered.

   B

   Group cover ends when the employee leaves.

   C

   Tax treatment depends on who pays; that isn't the main attraction.

5. Question 5 of 5

   Which of the following is NOT a benefit of group critical illness cover to the employer?

   Option A: It can ease the financial strain of supporting a seriously ill employeeOption B: It can make the employer more attractive to staffOption C: It is a relatively inexpensive, high 'added value' benefitOption D: The claim payment is paid to the employer as a trading receipt

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   The answer is D: The claim payment is paid to the employer as a trading receipt

   Group critical illness payments are usually made directly to the employee. The other options are genuine benefits to the employer.

   Why the other options are wrong

   A

   This is a genuine benefit: it eases the strain of supporting a seriously ill employee.

   B

   This is a genuine benefit: it can help the employer attract and keep staff.

   C

   This is a genuine benefit: group critical illness is relatively cheap and valued by staff.

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