Claims Management

• Topic 01

  Claims Management

  51 questions

A few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.

1. A policyholder's life assured spouse dies unexpectedly. What actions should the beneficiary take in the first 48 hours to initiate the life assurance claim?

   • A
     Register the death and obtain the certified death certificate; then notify the insurer and the adviser, who can assist with the claims form and required documentation
     Correct answer
   • B
     Contact HMRC to obtain clearance for the death benefit before the insurer can release any funds
   • C
     Contact the Financial Ombudsman Service immediately to start the formal claims investigation
   • D
     Appoint a solicitor to handle all communications with the insurer and submit all documentation through legal counsel only
   Explanation

   The immediate practical steps after a death are: (1) register the death with the registrar and obtain the certified death certificate — this is the primary document required for all life assurance claims; (2) notify the insurer of the claim (by phone or in writing); (3) contact the adviser if they have an ongoing service relationship. The adviser can assist with the claim form and documentation. Probate is not required at this stage if the policy is in trust; even if not in trust, it will be needed later but shouldn't delay initial notification.

2. An IP claimant returns to work part-time while still receiving IP benefits. What typically happens to the IP benefit level in this scenario?

   • A
     There is no change to the IP benefit as returning to part-time work has no effect on the claim until the claimant returns to full-time employment
   • B
     Most IP policies include a proportionate or rehabilitation benefit that reduces the IP payment proportionately when the claimant earns some income from part-time work, to prevent over-insurance while supporting return to work
     Correct answer
   • C
     The IP benefit is doubled for 3 months as a return-to-work incentive, then reduced to the standard rate when full-time work resumes
   • D
     The IP benefit stops entirely as soon as the claimant does any paid work, regardless of the hours or earnings
   Explanation

   Most modern IP policies include a proportionate or rehabilitation benefit clause. When a claimant returns to work on a part-time or reduced-income basis, the IP benefit is reduced proportionately so that total income (IP benefit + earnings) does not exceed the original pre-incapacity benefit cap. This supports a gradual return to work without creating a financial disincentive (the 'all or nothing' problem). The adviser should draw attention to this feature when explaining IP policies at the point of sale.

3. What is the survival period requirement in a typical critical illness insurance policy?

   • A
     The survival period is 7 days; if the claimant survives for one week after diagnosis, the benefit is paid immediately
   • B
     There is no survival period; the CI benefit is paid immediately on diagnosis
   • C
     The claimant must survive for 6 months to demonstrate recovery before a CI benefit is paid
   • D
     Most CI policies require the claimant to survive for 28 to 30 days after diagnosis before a claim is payable
     Correct answer
   Explanation

   Most CI policies include a survival period of typically 28 or 30 days from the date of diagnosis. If the claimant dies within this survival period, the CI benefit is not paid (though on combined life and CI policies, the life element would pay instead). The purpose of the survival period is to ensure the CI benefit provides financial support for someone living with a serious illness rather than effectively doubling up with a death benefit. This is frequently tested in R05 MCQ questions.