R05 Definitions of incapacity: free practice questions

1. Question 1 of 5

   Which definition of incapacity provides the widest cover under an income protection policy?

   Option A: Any occupationOption B: Own occupationOption C: Suited occupationOption D: Activities of daily working

   Show answer

   The answer is B: Own occupation

   Own occupation pays if the insured cannot do their own job and is not working in any other. It is the widest and most generous definition.

   Why the other options are wrong

   A

   Any occupation is the tightest definition, not the widest.

   C

   Suited occupation is narrower than own occupation.

   D

   Activities of daily working is a strict test, usually for people without an occupation.

2. Question 2 of 5

   Which definition of incapacity is the tightest?

   Option A: Any occupationOption B: Own occupationOption C: Suited occupationOption D: Own occupation with proportionate benefit

   Show answer

   The answer is A: Any occupation

   Any occupation requires the insured to be unable to follow any occupation at all, which makes a successful claim hardest.

   Why the other options are wrong

   B

   Own occupation is the widest definition.

   C

   Suited occupation is stricter than own occupation but less strict than any occupation.

   D

   Own occupation with proportionate benefit is still based on the insured's own job.

3. Question 3 of 5

   How is incapacity usually assessed for an insured person who is not in paid work, such as a homemaker?

   Option A: By the number of days spent in hospital during the deferred periodOption B: By failing activities of daily living or working, or a functional testOption C: On the same basis as the main earner in the householdOption D: On an own occupation basis, using the homemaker's usual duties

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   The answer is B: By failing activities of daily living or working, or a functional test

   Without an occupation to test against, insurers use activities of daily living or working, or a functional ability test. These are usually stricter than occupation-based definitions.

   Why the other options are wrong

   A

   Days in hospital aren't the test of incapacity.

   C

   They're assessed on their own ability, not the main earner's job.

   D

   A homemaker has no paid occupation to test against.

4. Question 4 of 5

   Wendy's policy pays on an own occupation basis for the first two years of a claim, then switches to suited occupation. What is the main risk for her?

   Option A: Benefit may stop if she's judged fit for suited work but can't do her own jobOption B: The deferred period will start again once two years have passedOption C: Her premium will automatically double once she has claimed for two yearsOption D: Her benefit will become subject to income tax after two years

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   The answer is A: Benefit may stop if she's judged fit for suited work but can't do her own job

   Switching to a stricter definition lowers the premium but reduces cover. After the switch, benefit can stop if the insurer decides she can do suited work, so the adviser must explain this.

   Why the other options are wrong

   B

   The deferred period isn't restarted by the change of definition.

   C

   The premium doesn't double; the risk is that benefit stops under the stricter definition.

   D

   Individual IP benefit stays tax-free; the change is to the definition, not the tax treatment.

5. Question 5 of 5

   Under an own occupation definition, benefit would NOT normally be paid in which situation?

   Option A: The insured has taken up a different full-time paid jobOption B: The insured is recovering at home after surgeryOption C: The insured cannot do their usual job and is waiting for treatmentOption D: The insured cannot perform their own job and is not working

   Show answer

   The answer is A: The insured has taken up a different full-time paid job

   Own occupation wording typically requires the insured to be unable to do their own occupation and not following any other occupation. Taking other paid work would normally end entitlement, unless a proportionate benefit clause applies.

   Why the other options are wrong

   B

   Recovering at home after surgery and unable to work in her own job is a normal claim.

   C

   Waiting for treatment while unable to do her usual job is still a valid claim.

   D

   This is a normal own occupation claim: she can't do her own job and isn't working.

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