R05 Personal protection needs: free practice questions

1. Question 1 of 5

   Which of the following is one of the main areas of need for protection?

   Option A: Mobile phone damageOption B: Holiday cancellationOption C: Asset protectionOption D: Pet insurance

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   The answer is C: Asset protection

   The main areas of need are health, incapacity or accident; income, mortgage and other debt; death; asset protection; and business protection.

   Why the other options are wrong

   A

   Mobile phone damage is general insurance, not financial protection.

   B

   Holiday cancellation is general insurance, not a main area of protection need.

   D

   Pet insurance isn't one of the main areas of protection need.

2. Question 2 of 5

   Mia is single, has no dependants and has just bought her first home with a mortgage. Which cover is usually most appropriate?

   Option A: Income protection, so she can keep paying her mortgage if illOption B: Level term assurance written for the benefit of her parentsOption C: Family income benefit to replace her salary for her familyOption D: Whole of life cover to meet a future inheritance tax bill

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   The answer is A: Income protection, so she can keep paying her mortgage if ill

   With no dependants, life cover is less of a priority. The key risk is being unable to work and pay the mortgage, so income protection is usually most appropriate.

   Why the other options are wrong

   B

   Her parents don't depend on her income, so level term for them isn't the priority.

   C

   Family income benefit provides for dependants, and she has none.

   D

   Whole of life cover for IHT isn't a priority for a first-time buyer with no dependants.

3. Question 3 of 5

   Why do improving cancer survival rates strengthen the case for critical illness and income protection cover?

   Option A: Survivors never need to stop work, so their earnings are rarely affected at allOption B: Improved survival means insurers no longer include cancer in their definitionsOption C: Many people live for years after diagnosis, facing lost earnings and extra costsOption D: Survivors are fully covered by the NHS and State benefits for all of their costs

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   The answer is C: Many people live for years after diagnosis, facing lost earnings and extra costs

   Many people survive for years after diagnosis. Some cannot return to full-time work and may need income replacement and capital, for example to adapt their home.

   Why the other options are wrong

   A

   Many survivors can't return to full-time work, which is exactly why income replacement matters.

   B

   Cancer remains a core condition covered by critical illness policies; better survival doesn't remove it.

   D

   The NHS treats the illness, but it doesn't replace lost earnings or pay for things like home adaptations.

4. Question 4 of 5

   What is the ultimate sanction a lender can impose if mortgage payments are not kept up?

   Option A: Cancelling the borrower's bank accountOption B: Seeking possession of the propertyOption C: Increasing the interest rate for lifeOption D: Reporting the borrower to HMRC

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   The answer is B: Seeking possession of the property

   A lender can ultimately seek possession of the property, and missed payments damage the borrower's credit rating, making future credit harder to obtain.

   Why the other options are wrong

   A

   Lenders don't cancel borrowers' bank accounts for missed mortgage payments.

   C

   A lender can't simply raise the interest rate for life as a sanction.

   D

   Missed mortgage payments aren't reported to HMRC.

5. Question 5 of 5

   Ned and Ola both work, and the household needs both incomes to meet its commitments. What protection need does this create?

   Option A: Only Ned needs life cover, as he is the higher earner of the twoOption B: Neither needs cover, as both are workingOption C: Only the younger partner needs cover, as they have more years to workOption D: Each has a need for protection against the death of the other

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   The answer is D: Each has a need for protection against the death of the other

   Where both earnings are necessary, each partner has a protection need against the death of the other. The simple rule is that life cover may be needed wherever death would have a financial impact.

   Why the other options are wrong

   A

   The higher earner isn't the only one who matters when both incomes are needed.

   B

   Both working is exactly why each depends on the other's income.

   C

   Age doesn't decide who needs cover; both incomes are needed.

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