R05 IP options and additional benefits: free practice questions

1. Question 1 of 5

   When is rehabilitation benefit typically paid under an income protection policy?

   Option A: When the claimant returns to a different, lower-paid job elsewhereOption B: When the claimant returns to their same job but at reduced earningsOption C: When the claimant reaches the policy ceasing ageOption D: When the claimant is admitted to hospital

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   The answer is B: When the claimant returns to their same job but at reduced earnings

   Rehabilitation, or back to work, benefit tops up earnings where the claimant returns to their own job on reduced pay, for example part-time. It is based on the ratio of current to insured earnings.

   Why the other options are wrong

   A

   A move to a different, lower-paid job is covered by proportionate benefit.

   C

   Reaching the ceasing age ends cover; it isn't when rehabilitation benefit is paid.

   D

   Being admitted to hospital isn't the trigger for rehabilitation benefit.

2. Question 2 of 5

   Ava's insured monthly benefit is £2,400, based on pre-incapacity earnings of £4,800 a month. She returns in a lighter role earning £2,400 a month. Using a simple proportionate formula based on lost earnings, what benefit is payable?

   Option A: £600Option B: £1,800Option C: £1,200Option D: £2,400

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   The answer is C: £1,200

   She has lost half her earnings: (£4,800 − £2,400) ÷ £4,800 = 50%. Benefit is 50% × £2,400 = £1,200 a month. Exact formulas vary between insurers.

   Why the other options are wrong

   A

   £600 is a quarter of the benefit; her loss is 50%, so she gets half of £2,400.

   B

   £1,800 is three-quarters; she lost half her earnings, so the benefit is £1,200.

   D

   £2,400 is the full benefit; she's back at work and has lost only half her earnings.

3. Question 3 of 5

   Bella's IP benefit increases each year in line with RPI, but her earnings have fallen. What should she be careful of?

   Option A: Paying for benefit above what her earnings would support at claimOption B: Losing the waiver of premium benefit attached to the policyOption C: Her policy becoming a qualifying policy because of the increasesOption D: The deferred period being extended each time benefit increases

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   The answer is A: Paying for benefit above what her earnings would support at claim

   Benefit is capped by earnings at claim, so increases beyond what her earnings support would cost more for no extra benefit. She may be able to decline, though some insurers withdraw future offers after, for example, two consecutive refusals.

   Why the other options are wrong

   B

   Increases don't affect waiver of premium.

   C

   Increases don't turn an IP policy into a qualifying policy.

   D

   Increases don't extend the deferred period.

4. Question 4 of 5

   Which is an example of a non-financial added value benefit that an income protection insurer might provide?

   Option A: A higher benefit limit for members of group schemesOption B: A refund of all premiums at the ceasing ageOption C: Cognitive behavioural therapy to help manage stressOption D: A cash bonus paid on each policy anniversary

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   The answer is C: Cognitive behavioural therapy to help manage stress

   IP insurers increasingly offer practical help such as rehabilitation programmes, CBT, workplace adaptation advice, counselling helplines and virtual GP services, often through specialist partners.

   Why the other options are wrong

   A

   A higher benefit limit is a policy term, not added-value support.

   B

   IP doesn't usually refund premiums at the ceasing age.

   D

   A cash bonus is a financial benefit, not a non-financial one.

5. Question 5 of 5

   Which statement about waiver of premium (WOP) is correct?

   Option A: WOP pays the linked policy's premiums during incapacity, on IP-style termsOption B: WOP pays the insured a regular cash income equal to their monthly premiumsOption C: WOP is always provided free of charge and needs no underwritingOption D: WOP added to a new personal pension still attracts tax relief

   Show answer

   The answer is A: WOP pays the linked policy's premiums during incapacity, on IP-style terms

   WOP pays the premiums of the policy it is attached to while the insured is incapacitated. It uses IP-style definitions, typically costs 2–5% of the premium, and is usually built into IP policies.

   Why the other options are wrong

   B

   WOP doesn't pay an income to the insured; it pays the linked policy's premiums.

   C

   WOP usually costs extra and is underwritten.

   D

   WOP on new personal pensions no longer gets tax relief.

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