Free CII R05 Practice Questions: Income Protection Insurance

CII means Chartered Insurance Institute. R05 is Financial Protection in the Diploma in Regulated Financial Planning. Use this focused CII R05 page as a short practice test for Income Protection Insurance. The items are original Finance Prep sample exam questions built for scenario-based practice, not trivia, puzzle questions, official CII questions, copied live-exam content, or exam dumps.

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Sample questions

These are original Finance Prep practice questions aligned to this topic area. They are not official CII questions, copied live-exam content, or exam dumps. Use them to preview question style and explanation depth before continuing with topic drills, mixed sets, and timed mock exams in Finance Prep.

Question 1

Topic: Income Protection Insurance

A protection adviser is reviewing income protection for Daniel, age 36.

Client facts:

• Earnings: employed IT support manager earning £48,000 a year.
• Occupation: mainly office-based, with no hazardous duties.
• Health: non-smoker with well-controlled asthma and no recent absence from work.
• Debt: £185,000 repayment mortgage and regular household bills that rely on his income.
• Existing benefits: employer sick pay of 13 weeks’ full pay, then statutory sick pay only; death-in-service cover but no group income protection.
• Savings: about three months’ essential expenditure.

What is the best recommendation?

• A. Recommend an individual income protection policy on an own-occupation basis, with a deferred period broadly aligned to his employer sick pay and savings.
• B. Recommend critical illness insurance instead, because it will replace his salary for any illness that prevents him from working.
• C. Recommend income protection designed to pay 100% of his gross salary from the first day of absence.
• D. Do not recommend income protection, because his death-in-service cover removes the main protection need.

Best answer: A

What this tests: Income Protection Insurance

Explanation: Income protection is designed to replace part of a client’s earnings if illness or injury prevents them from working. Daniel has clear dependency on earned income, a mortgage, only short-term employer sick pay, and no group income protection. His office-based occupation should generally support availability of cover on more favourable terms than a hazardous manual role, while his controlled asthma is an underwriting factor rather than an automatic reason to reject cover. A suitable recommendation would normally consider an own-occupation definition where available, an insured benefit within the insurer’s permitted limits, and a deferred period that reflects employer sick pay and accessible savings so premiums remain affordable.

• Critical illness insurance pays only on specified conditions and is not a general salary replacement policy.
• Death-in-service cover helps dependants on death, but it does not provide Daniel with income if he is unable to work through illness or injury.
• Cover for 100% of gross salary from day one is generally unrealistic and would not reflect benefit limits, deferred-period choices, or affordability.

Daniel has an ongoing earned income need, limited long-term employer support, mortgage commitments, and a low-risk occupation, so income protection is suitable subject to underwriting.

Question 2

Topic: Income Protection Insurance

A self-employed plumber is making a claim under an income protection insurance policy after a serious shoulder injury.

Policy and claim facts:

• The policy pays after a 13-week deferred period.
• The incapacity definition is based on being unable to carry out the material duties of his own occupation.
• The maximum benefit is linked to his pre-incapacity earned income.
• He has no employer sick pay and his recent income has varied from year to year.
• The insurer has asked for evidence before admitting the claim.

What is the best professional response?

• A. Provide medical evidence of the injury, details of his normal plumbing duties, and recent business accounts or tax calculations showing earned income.
• B. Provide evidence of any State benefits claimed, because State benefit entitlement determines whether the policy claim is valid.
• C. Provide only the original application form, because the insurer has already underwritten the policy.
• D. Provide bank statements showing household expenditure and confirmation that he has no employer sick pay.

Best answer: A

What this tests: Income Protection Insurance

Explanation: For an income protection claim, the insurer normally needs evidence that the insured meets the policy definition of incapacity and that the benefit claimed is supported by earnings. In an own-occupation policy, medical evidence alone is not enough; the insurer must also understand the client’s normal work duties and whether the condition prevents those duties from being performed. Where the claimant is self-employed and income varies, accounts, tax calculations, or similar financial records are needed to verify pre-incapacity earned income and calculate the insured benefit. State benefits or household spending may be relevant to wider financial planning, but they do not by themselves prove policy eligibility.

• Household expenditure does not verify the policy definition of incapacity or the insured’s earned income.
• The original application may help with disclosure checks, but it does not prove the current incapacity or claim amount.
• State benefit entitlement is separate from the insurer’s contractual claim assessment.

These records address the key claim tests: incapacity, own-occupation duties, deferred-period eligibility, and the benefit amount linked to earnings.

Question 3

Topic: Income Protection Insurance

A 38-year-old employed architect is comparing income protection insurance policies. She wants the cover to be cost-effective but does not want to rely on State benefits if she is unable to work for a long period.

Client facts:

• Employer sick pay: 26 weeks on full pay, then 26 weeks on half pay.
• Emergency savings: enough to cover the shortfall during the half-pay period.
• Main need: replacement income after employer sick pay ends.
• Preference: cover should pay if she cannot carry out her own occupation as an architect.
• Preference: benefit and premiums should be predictable, and benefit should keep pace with inflation.
• Planned retirement age: 65.

Which policy is best supported by these facts?

• A. Policy B
• B. Policy D
• C. Policy A
• D. Policy C

Best answer: A

What this tests: Income Protection Insurance

Explanation: Income protection suitability should match the client’s income-risk gap, sick-pay arrangements, occupation, required benefit duration and affordability. A deferred period of 52 weeks is well supported because employer sick pay runs for 52 weeks and savings can cover the half-pay shortfall. This avoids paying for an unnecessarily short deferred period. An own-occupation definition is important because the client wants cover if she cannot work as an architect, rather than only if she cannot do any work. Cover to age 65 supports the long-term income need to planned retirement. Index-linked benefit helps maintain real income during a long claim, and guaranteed premiums meet the preference for predictability.

• A 26-week deferred period would overlap with half-pay and is less cost-effective when savings can cover that shortfall; level benefit and reviewable premiums also conflict with her preferences.
• An any-occupation definition is weaker than the required own-occupation basis for an architect concerned about being unable to perform her specific role.
• A five-year claim limit may help with medium-term incapacity, but it does not meet the stated need for long-term income protection to age 65.

It matches the end of employer sick pay, uses an own-occupation definition, runs to age 65, provides index-linked benefit and has guaranteed premiums.

Question 4

Topic: Income Protection Insurance

Maya is a self-employed dental hygienist considering an income protection insurance policy.

Policy wording extract:

• Definition of incapacity: unable, because of illness or injury, to perform the material and substantial duties of her own occupation.
• Deferred period: 13 weeks.
• Exclusions include intentional self-inflicted injury, alcohol or drug misuse, and normal pregnancy or childbirth.

Six months after taking out the policy, Maya injures her dominant wrist in a cycling accident. Her doctor confirms she cannot use dental instruments and cannot work as a dental hygienist. She may be able to do general administrative work for lower pay.

How is the policy definition most likely to apply?

• A. The claim is excluded because the injury arose from an accident rather than an illness.
• B. The claim is excluded because self-employed clients cannot normally claim income protection benefit.
• C. The claim must fail because she is capable of doing some form of paid work.
• D. The claim may be valid after the deferred period because she cannot perform the material duties of her own occupation.

Best answer: D

What this tests: Income Protection Insurance

Explanation: Income protection policies define incapacity in different ways. An own-occupation definition is generally more favourable to the insured because the test is whether they can carry out the material and substantial duties of their normal occupation. Maya cannot use dental instruments, so she cannot perform her role as a dental hygienist. The fact that she might be able to do unrelated administrative work does not, by itself, defeat an own-occupation claim. Payment would still depend on satisfying the deferred period, medical evidence, earnings evidence, and the full policy terms. The listed exclusions do not apply to an accidental wrist injury in these facts.

• Being able to do some paid work would be more relevant under stricter suited-occupation or any-occupation definitions.
• Income protection covers illness or injury, so an accidental injury is not automatically outside scope.
• Self-employed people can use income protection, although benefit levels and evidence of earnings are important.

An own-occupation definition focuses on whether Maya can perform her dental hygienist role, not whether she could do unrelated lower-paid work.

Question 5

Topic: Income Protection Insurance

An adviser is comparing income protection insurance for Emily, aged 38, an employed surveyor.

Client facts:

• Gross salary: £54,000 a year.
• Employer sick pay: full pay for 26 weeks, then no pay.
• Essential monthly household spending: £2,450.
• She wants cover to continue if a long illness prevents her from doing her own job.
• She wants premiums that are predictable and can afford up to £60 a month.

Policy comparison:

Which recommendation is best supported by these facts?

• A. Recommend Policy A because it best matches her sick pay, occupation-risk concern, long-term need, and premium preference.
• B. Recommend Policy B because suited occupation cover is normally more suitable for a professional client.
• C. Recommend delaying cover because her employer sick pay removes the need for income protection.
• D. Recommend Policy B because the shorter deferred period gives the earliest possible claim payment.

Best answer: A

What this tests: Income Protection Insurance

Explanation: Income protection suitability should be assessed against the client’s income shortfall, employer sick pay, desired definition of incapacity, benefit term, affordability, and premium certainty. Emily has full sick pay for 26 weeks, so a 26-week deferred period avoids paying for cover that largely overlaps with employer provision. Her need is long term because she wants protection if a serious illness prevents her from doing her own job until retirement age. An own occupation definition is generally stronger than suited occupation because it focuses on whether she can perform her own role. Policy A also uses guaranteed premiums and remains within her £60 monthly budget. Policy B is cheaper and pays sooner, but its early deferred period is less valuable while she is on full sick pay, and its 24-month payment limit and reviewable premiums do not match her stated priorities.

• A shorter deferred period can be useful, but here it overlaps with 26 weeks of full employer sick pay.
• Suited occupation cover is weaker than own occupation cover where the client wants protection linked to inability to do her own job.
• Employer sick pay reduces the immediate need but does not remove the need for long-term income protection after sick pay ends.

Policy A aligns the deferred period with employer sick pay and provides own occupation, long-term cover within her stated premium budget.

Question 6

Topic: Income Protection Insurance

A self-employed graphic designer has no employer sick pay. She has enough savings to cover three months of household spending, but she would struggle to meet ongoing bills if illness or injury stopped her working for a longer period. Her main concern is replacing part of her earned income until she can return to work or reaches retirement age.

Which policy type is most likely to meet this need?

• A. Critical illness insurance paying a lump sum only on diagnosis of specified serious conditions
• B. Payment protection insurance covering only her largest credit card balance
• C. Long-term income protection insurance with a deferred period broadly matching her savings period
• D. Personal accident insurance paying fixed benefits only for accidental injury

Best answer: C

What this tests: Income Protection Insurance

Explanation: Income protection insurance is intended to replace a proportion of earnings when the insured person cannot work because of illness or injury. For someone self-employed with no employer sick pay, a long-term income protection policy can protect ongoing household expenditure after savings are exhausted. The deferred period should usually be chosen with existing savings, sick pay, and affordability in mind. Shorter-term accident, sickness and unemployment or payment protection policies may help with specific debts or temporary needs, but they are less suitable for a long-term income-replacement need. Critical illness cover can be useful, but it pays only if the insured meets the policy definition for a covered condition, rather than providing continuing income for any qualifying incapacity.

• Payment protection aimed at a credit card balance would not protect the client’s wider household income need.
• Critical illness cover may provide a lump sum, but it does not replace income for all illnesses or injuries causing incapacity.
• Personal accident cover is too narrow because it usually focuses on accidental injury rather than illness and long-term earnings replacement.

Long-term income protection is designed to pay a regular replacement income after a deferred period if illness or injury prevents work.

Question 7

Topic: Income Protection Insurance

Maya, age 35, is an employed physiotherapist. She wants income protection that would maintain essential household spending if illness or injury stops her working in her current clinical role. She expects to work until age 68 and can afford up to £70 per month in premiums.

Client facts:

• Net monthly pay: £3,050
• Essential monthly spending: £2,250
• Employer sick pay: 13 weeks full pay, then 13 weeks half pay, then nil
• Half pay is approximately £1,525 net per month
• Savings available for months 4 to 6: £750 per month

Available income protection policies:

Which conclusion is most appropriate?

• A. Policy B best matches Maya’s stated need because the 26-week deferred period is covered by sick pay and savings, and the benefit then meets essential spending on an own-occupation basis to age 68.
• B. Policy C is preferable because it gives the same monthly benefit as Policy B at a much lower premium.
• C. Policy A is preferable because the shorter deferred period always provides better value when employer sick pay reduces after 13 weeks.
• D. Policy D is preferable because it is within budget and has the same 26-week deferred period as Policy B.

Best answer: A

What this tests: Income Protection Insurance

Explanation: Income protection suitability depends on matching the deferred period to available sick pay and savings, then checking the benefit level, payment term, incapacity definition, exclusions, and affordability. Maya’s half-pay period creates a monthly shortfall of £725 (£2,250 essential spending less £1,525 half pay), which her £750 monthly savings can cover for months 4 to 6. A 26-week deferred period is therefore reasonable. After employer sick pay stops, she needs about £2,250 per month. Policy B meets that amount, pays to age 68, uses an own-occupation definition for her clinical role, and is within her £70 premium budget.

• The 13-week deferred policy gives earlier cover, but it costs more than Maya’s stated budget and duplicates a period she can bridge with sick pay and savings.
• The lower-premium 24-month policy does not meet her need for long-term protection to retirement age.
• The £1,600 benefit is below essential spending, and the suited-occupation wording plus musculoskeletal exclusion are significant weaknesses for a physiotherapist.

The month 4 to 6 shortfall is about £725 per month, which her savings can cover, and the policy then provides the required long-term own-occupation benefit within budget.

Question 8

Topic: Income Protection Insurance

A self-employed graphic designer wants cover if illness or injury prevents them from working. They have no employer sick pay and want to protect essential household spending until retirement if necessary.

Client facts:

• Gross earnings: £48,000 a year (£4,000 a month)
• Essential household spending: £2,700 a month
• Partner’s reliable net income available for bills: £800 a month
• Emergency fund: enough to cover 6 months of the shortfall
• Insurer’s maximum income protection benefit: 60% of gross monthly earnings
• Planned retirement age: 65

Which conclusion best matches the policy type and level of cover to the need?

• A. Accident, sickness and unemployment cover of £1,900 a month, because it is designed to replace income until retirement.
• B. Private medical insurance with a £1,900 monthly benefit, because treatment costs are the main protection gap.
• C. Critical illness cover for £22,800, because one year’s shortfall is the full amount needed for long-term incapacity.
• D. Long-term income protection of about £1,900 a month, with a 26-week deferred period and cover potentially running to age 65.

Best answer: D

What this tests: Income Protection Insurance

Explanation: The key protection need is ongoing replacement income if illness or injury stops the client working. The monthly gap is essential spending of £2,700 less the partner’s £800 contribution, giving £1,900. The insurer’s maximum benefit is 60% of £4,000 gross monthly earnings, or £2,400, so £1,900 is within the allowable limit. A long-term income protection policy is designed to pay a regular benefit after a deferred period and can continue until recovery, death, policy expiry or retirement age, depending on the contract. A 26-week deferred period is suitable because the emergency fund can cover six months of the shortfall before benefits are needed.

• Accident, sickness and unemployment cover is usually short term and is not intended to provide income replacement through to retirement.
• Private medical insurance may fund eligible treatment costs, but it does not replace lost earnings for household expenditure.
• Critical illness cover pays a lump sum on specified conditions and one year’s shortfall would not meet a potentially long-term incapacity need.

The monthly shortfall is £1,900 and this is within the £2,400 maximum benefit, while the 26-week deferred period matches the emergency fund.

Question 9

Topic: Income Protection Insurance

A client is claiming under an individual income protection policy after being unable to work due to a serious back condition.

Application and claim facts:

• The policy started 18 months ago.
• The application asked: “Have you had any back, neck or spinal symptoms, treatment or time off work in the last five years?”
• The client answered No.
• GP notes show that, two years before applying, the client had three weeks off work with back pain and was referred for physiotherapy.
• The client says he regarded the earlier problem as minor and did not intend to hide anything.
• The insurer says it would have accepted the policy but added a back exclusion if the history had been disclosed.

What is the best conclusion?

• A. The insurer must ignore the GP notes unless the previous back condition was medically identical to the current condition.
• B. The insurer must pay the claim because the client did not deliberately conceal the information.
• C. The insurer can automatically void the policy and keep all premiums because any non-disclosure invalidates income protection cover.
• D. The insurer may treat the policy as if the back exclusion had applied and decline the back-related claim.

Best answer: D

What this tests: Income Protection Insurance

Explanation: For consumer protection policies, the client must take reasonable care not to make a misrepresentation when answering the insurer’s questions. A clear question about back symptoms, treatment and time off work made the previous GP absence and physiotherapy relevant. The facts suggest careless rather than deliberate or reckless misrepresentation, because the client says he thought the earlier issue was minor. The remedy should reflect what the insurer would have done with the correct information. As the insurer says it would still have offered cover but with a back exclusion, the appropriate outcome is to treat the policy as if that exclusion had applied from the start. That means the back-related claim can be declined, while the whole policy is not automatically voided as deliberate non-disclosure.

• Lack of intent does not guarantee payment; a careless incorrect answer to a clear underwriting question can still affect the claim.
• Automatic voidance and retention of premiums is not the normal remedy for a careless consumer misrepresentation.
• The issue is whether the undisclosed history was material to underwriting, not whether the earlier and current diagnoses are exactly identical.

A careless misrepresentation can allow the insurer to apply the terms it would have used had the facts been disclosed.

Question 10

Topic: Income Protection Insurance

Amira is a self-employed graphic designer with an individual income protection policy.

Claim facts:

• The policy has an own occupation incapacity definition.
• The deferred period is 13 weeks.
• She has fractured her dominant wrist and her GP has certified that she cannot use a keyboard or drawing tablet.
• She expects to recover within 8 to 10 weeks and asks whether she should wait until the deferred period has passed before contacting the insurer.

What is the best professional response?

• A. Tell Amira to claim only if she is unable to perform any occupation, because income protection claims are assessed on that basis in all cases.
• B. Tell Amira to notify the insurer promptly and provide the required medical and occupational evidence, even though benefit payments may not start unless incapacity continues beyond the deferred period.
• C. Tell Amira to stop paying premiums during her absence from work, because incapacity automatically suspends income protection premiums.
• D. Tell Amira to wait until week 13 before contacting the insurer, because no valid claim can exist until the deferred period has expired.

Best answer: B

What this tests: Income Protection Insurance

Explanation: Income protection claims should normally be notified promptly and handled according to the policy’s claim conditions. The insurer will usually require medical evidence, details of the claimant’s occupation and duties, and may ask for ongoing evidence during the deferred period. The deferred period is the waiting period before benefit can become payable; it is not a reason to delay notification. In Amira’s case, the own occupation definition is important because the assessment is whether she is unable to carry out her own work as a graphic designer, not whether she could do any work at all. Prompt notification also helps the insurer assess the claim, arrange any rehabilitation support, and avoid problems caused by late reporting.

• Waiting until week 13 confuses claim notification with the start of benefit payments.
• Stopping premiums is unsafe unless the policy specifically provides a premium waiver and its conditions have been met.
• Using an any occupation test ignores the stated own occupation definition, which is usually more favourable to the claimant.

The deferred period affects when benefit becomes payable, but claims should be notified in line with the policy conditions as soon as incapacity arises.

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