R05 Reviews and product interaction: free practice questions

1. Question 1 of 5

   How often should a client's protection arrangements ideally be reviewed?

   Option A: Yearly, with extra reviews when circumstances changeOption B: Every ten years, or whenever the client retiresOption C: Never, once the policies are in forceOption D: Only when a policy is due to expire

   Show answer

   The answer is A: Yearly, with extra reviews when circumstances change

   A review should ideally be yearly, with one-off reviews prompted by events such as marriage, divorce, a new child or a new mortgage.

   Why the other options are wrong

   B

   Every ten years is far too infrequent.

   C

   Protection should be reviewed as circumstances change.

   D

   Waiting until a policy expires is too late.

2. Question 2 of 5

   Nell holds two PMI policies covering the same treatment. What happens if she claims?

   Option A: Both policies are cancelled for dual insuranceOption B: The costs are only paid once, as PMI is indemnity coverOption C: The second policy pays double the treatment costOption D: Both policies pay in full, so she makes a profit on it

   Show answer

   The answer is B: The costs are only paid once, as PMI is indemnity cover

   For policies that pay treatment expenses, the indemnity principle means costs are only paid once. Over-insuring is pointless and may result in each policy paying a proportion.

   Why the other options are wrong

   A

   Holding two policies doesn't cancel them.

   C

   The second policy doesn't pay double.

   D

   PMI is an indemnity, so two policies can't pay out in full.

3. Question 3 of 5

   Oliver has two income protection policies. How might they interact at claim?

   Option A: Only the older of the two policies can ever payOption B: The newer policy is cancelled automatically when a claim is madeOption C: Each policy pays its full benefit, whatever his earnings wereOption D: Total IP benefit is capped by earnings, so one may reduce the other

   Show answer

   The answer is D: Total IP benefit is capped by earnings, so one may reduce the other

   Most IP policies limit total benefit from all IP policies to a percentage of earnings, so benefit under one policy can reduce the amount paid by another.

   Why the other options are wrong

   A

   Either policy can pay; the total is what's limited.

   B

   The newer policy isn't automatically cancelled.

   C

   Total IP benefit is capped by earnings, whatever each policy insures.

4. Question 4 of 5

   At a review, a new critical illness product appears cheaper than Quinn's existing policy. What particular risk should be checked before switching?

   Option A: The new policy may have tighter illness definitions than the old oneOption B: New policies cannot be written in trust like the old oneOption C: The old insurer will charge an exit penalty for cancelling earlyOption D: The new policy will be a qualifying policy for tax

   Show answer

   The answer is A: The new policy may have tighter illness definitions than the old one

   Critical illness definitions have often been tightened over time as medicine has advanced, so a new policy could give worse cover. Re-underwriting and not cancelling before the new cover starts also matter.

   Why the other options are wrong

   B

   New policies can be written in trust.

   C

   Protection policies don't usually have exit penalties.

   D

   Qualifying status isn't the concern with switching critical illness cover; the definitions are.

5. Question 5 of 5

   What is the trade-off of adding critical illness cover to a life policy as an accelerated benefit rather than buying separate policies?

   Option A: It removes the need for any medical underwritingOption B: It is identical in both cost and cover to separate policiesOption C: It is cheaper, but a CIC payout ends the death coverOption D: It is more expensive but gives more cover overall

   Show answer

   The answer is C: It is cheaper, but a CIC payout ends the death cover

   Bolt-on CIC is effectively an advance payment of the death sum assured, so it is cheaper than separate policies but there is no second payment on death.

   Why the other options are wrong

   A

   It still needs medical underwriting.

   B

   It isn't identical: it's cheaper, but there's no second payment.

   D

   Accelerated cover is cheaper, not more expensive, and gives less cover.

R0 Exam Prep is an independent revision tool. It is not produced, endorsed by or affiliated with the Chartered Insurance Institute (CII). Questions and explanations are original. Use it alongside the official study text. About R0 Exam Prep