P62SP
SPECIMEN
PAPER
P62 – Life, critical illness and disability claims
This Specimen Paper is intended as a guide to candidates preparing for an examination in Life,
critical illness and disability underwriting. It provides candidates with an insight into the different style
of questions in the question paper and indicates the depth and breadth of answer sought by
examiners. It also indicates the structure of the full question paper which will be presented to
candidates when they sit the examination in April 2013.
The answers presented in the question paper provide an outline of the key points which candidates
could beneficially cover in responding to the questions. They are not intended as a definitive answer
to each of the questions: in many instances the examiners can allow scope for well reasoned,
alternative views to gain good marks.
Careful preparation is a major factor in achieving examination success. Giving attention to these
specimen questions should therefore help candidates to feel more confident that they are prepared
for the forthcoming examination, and can demonstrate their knowledge to its full extent.
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CONTENTS
Important guidance for candidates.......................................................................................................3
Specimen paper.......................................................................................................................................6
Examples of answers............................................................................................................................11
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IMPORTANT GUIDANCE FOR CANDIDATES
Introduction
The purpose of this Specimen Paper is to help you to understand how examiners seek to assess
knowledge and skill of candidates. You can then demonstrate to the examiners that you meet
required levels of knowledge and skill to merit a pass in this unit. During your preparation for
examination it should be your aim not only to ensure that you are technically able to answer
questions but also that you can do justice to your abilities under examination conditions.
the
the
the
the
Before the examination
Make sure you have a copy of the current Diploma in Insurance Information for Candidates
Details of administrative arrangements and the regulations which form the basis of your examination
entry are to be found in the current Diploma in Insurance Information for Candidates brochure, which
is essential reading for all candidates. It is available online at www.cii.co.uk or from Customer Service.
Study the syllabus carefully
It is important to study the syllabus, which is available online at www.cii.co.uk or from Customer
Service. The questions in the question paper are based directly on the syllabus, so it is vital that you
are familiar with it.
Read widely
Your knowledge should be wider than the scope of one book. While books specifically produced to
support your studies will provide coverage of the syllabus areas, you should be prepared to read
around the subject. A reading list can be found at the end of the syllabus.
Make full use of the Specimen Paper
You can use Specimen Papers as ‘mock’ question papers, attempting them under examination
conditions as far as possible, and then comparing your answers to the examples of good ones.
Understand the nature of assessment
Each Specimen Paper contains a full question paper and examples of good answers. The examples
of good answers show the type of responses the examiners are looking for, and which would achieve
high marks. However, you should note that there are alternative answers to some question parts
which would also gain high marks. For the sake of clarity and brevity not all of these alternative
answers are shown.
Know the structure of the examination
Familiarise yourself with the structure of the question paper and the time allowed to complete it. This
information can be found on the question paper included within each Specimen Paper.
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In the examination
Do justice to yourself in the examination
Assuming you have prepared adequately, you will only do justice to yourself in the
examination if you follow two common sense rules:
Spend your time in accordance with the allocation of marks as indicated on the question paper.
If you do not complete the whole question paper, your chances of passing may be reduced
considerably. Do not spend excessive time on any one question. If you have used up the time
allocation for that question, leave some space, go on to the next question, and only return to the
incomplete question after you have completed the rest of the question paper. The maximum
marks allocated to each question and any constituent parts are given on the question paper; the
number of marks allocated is the best indication of how much time you should spend answering it.
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Take care to answer the precise question set. You will see that the examples of good answers
provided in this Specimen Paper are quite focused and precise; alternative answers would only
be acceptable if they still answer the question. However brilliantly you write on a particular topic,
if it does not provide a satisfactory answer to the precise question as set, you will not score the
marks allocated. Many candidates leave the examination room confident that they have written
‘good’ answers, only to be mystified when they receive a disappointing result. Often, the explanation
for this lies in a failure to think carefully about what the examiner requires, before putting pen to paper.
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Order of tackling questions
Tackle the questions in whatever order you feel most comfortable with. Generally, it is better to leave
any questions which you feel less confident in answering until you have attempted those with which
you are more familiar, but remember not to spend excessive time on your ‘good’ questions.
Handwriting
Provided your handwriting is legible, you will not lose marks if it is untidy. We recommend that you do
not write in block capitals, because you will be slowed down so much by doing so and, paradoxically,
block capitals can become more difficult to read than joined-up writing when done quickly.
Answer format
Unless the question requires you to produce an answer in a particular format, such as a letter or a
report, you should use ‘bullet points’ or short paragraphs, since this allows you to communicate your
thoughts in the most effective way in the shortest time. The good answers give an indication of which
style is acceptable for the different types of question.
Calculators
If you bring a calculator into the examination room, it must be a silent, battery or solar powered, nonprogrammable calculator. The use of electronic equipment capable of being programmed to hold
alphabetical or numerical data and/or formulae is prohibited. You may use a financial or scientific
calculator, provided it meets these requirements. It is important that you show all the steps of any
calculation in your answer. The examination is testing your ability to carry out all the appropriate
steps in calculating a value. A proficient mathematician is someone who follows the correct method,
i.e. carries out the appropriate steps. The majority of the available marks will be allocated for
demonstrating the correct method of calculation.
After the examination
All Diplomas in Insurance examiners, one of whom will mark your answer book, are either active
practitioners in the insurance industry or are experts on the subject. They have been specially trained
to mark question papers using a detailed marking scheme.
The marking of each examiner is closely monitored by a Senior Examiner during the marking period
and sampling of marked answer books is carried out.
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After all the answer books have been marked, a moderation meeting is held, at which all available
statistical information is considered, together with the views of the Senior Examiner for that unit and
other assessment experts. At the meeting, a pass mark is set to ensure that the standard of
knowledge and skills required to gain a pass in the examination is comparable with that of previous
question papers.
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P62
THE CHARTERED INSURANCE INSTITUTE
DIPLOMA
SPECIMEN PAPER
UNIT P62
Life, critical illness and disability claims
© The Chartered Insurance Institute 2012
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THE CHARTERED INSURANCE INSTITUTE
P62 – Life, critical illness and disability claims
Instructions to candidates
Read the instructions below before answering any questions
Three hours are allowed for this paper which carries a total of 200 marks, as follows:
Part I
Part II
14 compulsory questions
2 questions selected from 3
140 marks
60 marks
You should answer all questions in Part I and two out of the three questions in Part II.
You are advised to spend no more than two hours on Part I.
Read carefully all questions and information provided before starting to answer. Your answer will
be marked strictly in accordance with the question set.
The number of marks allocated to each question part is given next to the question and you
should spend your time in accordance with that allocation.
You may find it helpful in some places to make rough notes in the answer booklet. If you do this,
you should cross through these notes before you hand in the booklet.
It is important to show each step in any calculation, even if you have used a calculator.
If you bring a calculator into the examination room, it must be a silent battery or solar-powered
non-programmable calculator. The use of electronic equipment capable of being programmed to
hold alphabetic or numerical data and/or formulae is prohibited. You may use a financial or
scientific calculator, provided it meets these requirements.
Answer each question on a new page. If a question has more than one part, leave six lines
blank after each part.
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PART I
Answer ALL questions in Part I
Note form is acceptable where this conveys all the necessary information
1.
2.
Explain what a Vocational Assessment is and why it might be useful when assessing
an Income Protection Claim.
(a)
(b)
3.
4.
5.
(6 marks)
explain why they might do this.
(3 marks)
(15 marks)
Explain
(a)
the nature, symptoms and treatment of ulcerative colitis; and
(6 marks)
(b)
under what circumstances might this condition give rise to a valid Income
Protection or Total Permanent Disability claim.
(9 marks)
Explain
why underwriters ask applicants for CI assurance about their alcohol
consumption; and
(8 marks)
how questions about alcohol consumption on an application form may be
worded.
(4 marks)
Explain the additional considerations that arise when a life insurer is notified of a death
that has occurred overseas.
(7 marks)
(b)
7.
List three examples of where an IP insurer might provide non contractual
support to a claimant ; and
Explain the specific considerations that arise for the assessment of a death claim where
a policyholder dies 11 months after taking out a policy and the cause of death is
suspected to be suicide.
(a)
6.
(12 marks)
Explain
(a)
why group insurers have actively at work criteria; and
(b)
how these criteria are typically worded.
(4 marks)
(3 marks)
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8.
Identify four reasons why a claims assessor might refer a claim to the reassurer.
(8 marks)
9.
(a)
Describe the symptoms of anxiety; and
(6 marks)
(b)
explain the factors an assessor should take into account when deciding when
to review an existing Income Protection claim where the claimant is suffering
from anxiety.
(9 marks)
Explain the relevance of the Access to Health Records Act 1990 to the assessment of
death claims.
(8 marks)
11.
Name the heart valves and explain briefly their purpose.
(6 marks)
12.
State the purpose of the linked claims clause within an Income Protection policy and
explain how it typically operates.
(7 marks)
10.
13.
(a)
(b)
14.
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Describe insurable interest and identify at what stage(s) of a life contract it has
to be present.
(4 marks)
Give three examples of insurable interest that can be protected by means of
life insurance.
(6 marks)
Describe three types of authority that can be passed to an agent.
(9 marks)
PART II
Answer TWO of the following THREE questions
Each question is worth 30 marks
15.
As part of the assessment of a Critical Illness claim for breast cancer it is noted that a
policyholder had become aware of a lump in her breast prior to applying for the policy
th
on the 28 April 2012. No adverse disclosures were made on the application form,
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and the policy commenced on the 1 May 2012 at standard rates. She first consulted
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her General Practitioner in respect of the breast lump on 7 May 2012.
Identify what action an assessor would need to take in order to determine whether
non disclosure has arisen, and if so explain what the consequences would be.
16.
A company director who works for a small limited company which is 100% owned by
himself has submitted an income protection claim after sustaining multiple injuries in a
car accident.
(a)
(b)
17.
Explain how a claims assessor would determine the claimant’s pre-disability
earnings.
(14 marks)
Explain why his earnings might not be a good reflection of the performance of
the business in the pre-disability period.
(16 marks)
You are a claims assessor for XYZ insurance company. Mr. Smith, a policyholder,
has recently seen his General Practitioner and been diagnosed with Parkinson’s
disease. He has contacted you to make a claim for critical illness and also for waiver
of premium under his life policy.
Explain how you will assess his claims and discuss how his condition might give rise
to valid claims under his policies.
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(30 marks)
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(30 marks)
Example answers for Part I (Compulsory questions)
1.
A vocational assessment is a specialist analysis of job skills a person has and of what occupations
those skills may enable them to consider.
It encompasses a person’s;
work experience,
qualifications,
training, and
interests;
with a view to identifying what forms of employment they may be suited to.
It can be used to determine whether a claim is valid – as the defined alternative roles can be
considered in line with the definition of disability e.g. are there roles that the claimant can perform
under a ‘suited’ or ‘any’ occupation definition?.
Vocational assessments can also be used as a rehabilitation tool to aid claimants who have an
‘own’ occupation definition of incapacity in returning to alternative occupation, where they can no
longer carry out their usual role.
Where a disability claim is declined because the insurer concludes that the claimant is capable of
work, a vocational assessment will be important, specifically if the insurer is stating that the
claimant can do other forms of work.
2.
3.
(a)
Paying for transport to/from work for a claimant where they can still perform their role but
can’t independently travel there.
Paying for the claimant to go on a training course that will enable them to take up
alternative employment in the future.
Funding medical intervention that is either unavailable or subject to delays unless
privately funded, in order to speed up the recovery process.
(b)
The insurer will consider these actions because the cost of the non contractual support
does, or has the potential to, reduce the overall claims liability and it can be seen as a
gesture of goodwill.
The insurer needs to establish if there is a suicide exclusion in the policy.
If there is they need to check how long the suicide exclusion applies for and whether this might
mean this death is an excluded event.
If the insurer wants to use the exclusion they have to prove that on the balance of probabilities the
death arose from suicide.
The Coroner’s verdict may not specifically state the cause of death to be suicide as they have to
reach their decision on the facts being ‘beyond reasonable doubt’. Therefore even if the Coroner
gives an ‘open’ verdict the insurer may still wish to assert the suicide exclusion applies. If the
insurer cannot be sure of how the death arose then they are unlikely to apply the exclusion.
If there is no suicide exclusion on the policy the cause of death will not preclude payment.
The assessor also needs to consider the possibility of non disclosure. Given the short time the
policy has been in force it would be reasonable to consider whether the deceased had a history of
mental illness. To do this they could write to the deceased’s GP to request any relevant history of
mental illness prior to the policy start date – specifically looking for conditions, treatment, referrals
etc that fall within the scope of the questions asked on the application form.
If non disclosure is established the insurer needs to determine the impact this would have had on
terms – and how the non disclosure arose e.g. innocent/negligent/deliberate.
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4.
(a)
Ulcerative colitis involves inflammation of the lining of the colon which can give rise to
painful ulceration, rectal bleeding and hard to manage bowel movements.
The condition is subject to remissions and exacerbations.
There is no known cause for ulcerative colitis but treatment includes diet, medication and
surgery.
(b)
An inability to work in any occupation during a relapse would be expected. Therefore an IP
claim is likely to succeed. However the ability to work should be recovered after treatment
and when the claimant moves into remission. So, although disability may at times be total,
it would rarely be permanent.
It would only be the severest of cases with failed surgical intervention, and widespread
manifestations of the disease that would give rise to a total and permanent inability to work
in most occupations. The claimant’s occupation and the TPD definition of disability will
influence this assessment.
5.
(a)
Insurers ask applicants about alcohol consumption as it can have an adverse influence on
their health, and as a result increase the chance of a claim.
High alcohol consumption is also associated with an increased accident risk that could
also give rise to a CI claim.
If alcohol consumption is high the underwriter can seek further evidence in the form of a
report from the GP, or blood tests to check for liver function or other signs of alcohol
abuse.
(b)
Application forms typically ask for:
the amount of alcohol consumed – usually expressed as units per week
whether their consumption has ever been higher or
if they have ever been advised to reduce or modify their consumption?
6.
7.
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Verification of the death can be difficult.
Certification varies by country so assessors may not be familiar with the documentation.
Language barriers can hinder understanding of the circumstances.
Non disclosure of travel may need to be investigated.
Fraudulent documentation may be more readily available in some countries.
Medical records can be harder to obtain.
Translation of some documents may be required.
(a)
Group insurers are unable to individually underwrite all scheme members so by having an
‘actively at work’ clause they can at least establish that the member is well enough to be
attending their work at the time they join the scheme.
(b)
The criteria typically require that the employee is actively performing their usual work on
the day the policy started, and has had no more than a given level of sickness in a period
leading to the cover commencing.
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8.
A claim might be referred to the reassurer when:
The assessor wants to access the specialist resources the reassurer has e.g. CMO, or
legal support.
The treaty obliges the insurer to seek agreement from the reassurer based on the
circumstances of the claim.
The assessor wants a second opinion on a difficult case.
An ex gratia settlement or non contractual assistance is proposed – outside the terms of
the treaty arrangement.
An error has been made that may affect reassurance recovery.
9.
(a)
Anxiety is a mental health disorder resulting in unpleasant physical symptoms such as
palpitations, sweating and shakiness. It is usually experienced in situations that are difficult
or perceived as threatening.
Although almost everyone experiences anxiety at times if severe the sufferer may have
debilitating feelings of dread and apprehension and may worry incessantly. They may
suffer from an inability to relax coupled with fatigue, irritability and poor concentration.
(b)
Reviews of an IP claim arising from anxiety should be guided by:
The severity of the condition.
The treatment regime and their response to it.
The requirements of their job, and whether the anxiety is worsened by
occupational demands.
Whether there are any opportunities for intervention, support and rehab.
The level of benefit and potential duration of the claim.
The definition of disability and whether this will change at some point in the future.
10.
Insurers sometimes need to request the medical records of a deceased to check for non disclosure
under a life policy. As the person is no longer alive to give their consent to the release of the
records some doctors used to be reluctant to provide them.
Section 3 of the Access to Health Records Act sets out that any person authorised in writing to
make the application on the patient’s behalf can request medical records.
Medical information can therefore be released to insurers if the life insured had agreed to its
disclosure at the time of the original contract and the information is not of such a sensitive nature
that it should remain confidential.
11.
Pulmonary valve - Aortic valve – Mitral valve - Tricuspid valve
The heart valves ensure that blood passing through the heart flows in the right direction at all times.
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12.
The linked claims clause is designed to encourage claimants to return to work if they can without
the fear of having to serve a further deferred period if they are unable to sustain the return.
A further deferred period will be avoided if the claimant goes off work again within certain time
scales as a result of the same or a related condition.
There are usually no restrictions in the number of times a linked claim clause may be used.
13.
14.
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(a)
Insurable interest is the extent of the insured’s monetary interest in the subject matter of the
insurance. An insured cannot insure an item for more than the extent of their financial
interest. The principle that insurable interest only need be present at inception of the policy
was established in Dalby v. The India and London Life (1854).
(b)
Individuals have unlimited insurable interest on their own lives and that of their
spouse
An employer has an insurable interest in key employees as without them they would
incur a financial loss
A creditor has insurable interest in a debtor – to the amount of the outstanding debt.
The three types of authority that can be passed to an agent are:
express authority, where the principal gives instructions to their agent;
implied or usual authority, where the authority is implied from the conduct of the parties
and the circumstances of the case; and
apparent authority which is the authority the agent appears to have as a result of some
representation or conduct by the principal intended to be acted upon by the third party.
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Example answers for Part II (Scenario questions)
15.
In order to determine whether non disclosure has arisen the claims assessor would need to
obtain full details regarding the breast lump.
The information requested should correlate with the questions that were asked on the application
form in respect of the risk factors for breast cancer. Checks should be made to ensure that the
claimant was made aware of the importance of disclosing all relevant information/material facts in
response to the application questions
From the information provided it seems that the claimant did not see her GP until after the policy
started so the claims assessor will specifically need to consider whether questions were asked
about the presence of lumps, experiencing any symptoms for which a doctor has not yet been
seen, or plans to seek medical attention.
Questions relating to this history should be addressed to the claimant, the GP, and the specialist
to check for consistency of reporting. Each should be asked:
when the lump was first noted;
whether any symptoms were experienced e.g. pain, discharge, tenderness;
reported size of lump ;
any change in size of lump, or nature of symptoms between the date of onset and the
policy commencement
It would also be worth ascertaining when she made the appointment to see her GP as this could
have predated the policy start date.
If it is ascertained that medical information relating to the lump, symptoms, or plans for medical
consultation was non disclosed the assessor will need to obtain a retrospective underwriting
opinion to determine what acceptance terms if any would have been offered. It is likely that the
underwriters would have postponed cover until the lump had been investigated, and therefore no
cover would have been in place at the time of the diagnosis of cancer.
The claims assessor needs to ascertain why the information was non disclosed in order that this
can be categorised in line with ABI guidance. This is best achieved by means of a call to the
claimant asking her why she answered the application questions in the way she did.
If the non disclosure was innocent, perhaps because the application form questions were not
robust, or the extent of symptoms/size of lump was so trivial it would be reasonable to not
mention it then the non disclosure will not compromise the claim.
If however the non disclosure is regarded as negligent, deliberate, or careless then the policy will
be voided on the grounds of non disclosure and the claim denied. Premiums will usually be
refunded unless it is considered a fraudulent action.
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16.
To assess the claimant’s pre-disability earnings the assessor will need to obtain details for the
period stipulated in the policy conditions – usually the 12 months prior to the date of disability.
They will also need to see how the policy conditions define ‘earnings’ as this will guide what
information they can use.
A Company Director’s earnings typically consist of a combination of salary and dividends.
Salary is evidenced by means of payslips usually showing monthly pay, and a P60 which shows
th
earnings over the year to 5 April each year.
Dividends are evidenced by dividend vouchers, and may also be corroborated by the individual’s
tax assessments and also the trading accounts of the company.
Up to date salary details can be obtained by means of the latest P60 and any subsequent
payslips. Dividends can only be clarified at the end of the accounting year so it may be necessary
to review dividend earnings at some point in the future if the date of the accident does not
coincide with the end of the accounting year, or the accounts are yet to be finalised.
The assessor should check the policy terms and conditions as well as internal claims philosophy
to determine what can be included in the calculation of pre-disability earnings.
As the owner of the business the Company Director can determine how much to pay himself,
how it should be paid and when it should be paid. His remuneration package is therefore not
necessarily a reflection of how well the business is performing as he can effectively pay himself
more than the business generated in that period, or more than his contribution deserves. This
can be funded from capital or borrowings.
Directors may do this to manipulate their income tax liability, pay less National Insurance, or even
demonstrate over inflated income for the purposes of the IP claim.
To allow the IP benefit to be based on over inflated figures would mean that the claimant would
be financially much better off in receipt of a claim than running a loss making company.
The assessor may have to consider if the accounts and salary have been purposely manipulated
and the reasons why e.g. was the business in trouble, and did this pre-date the claim?
Dividends will usually be considered as forming part of the director’s earnings providing the
assessor is satisfied that the dividends are paid from profits that reflect the claimant’s contribution
in the pre-incapacity period, and that these will cease as a result of disability.
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17.
The waiver of premium claim will be assessed in line with the definition of disability in the policy –
typically the inability to undertake occupational duties or functional activities. Medical reports from
the treating doctors, along with self-reporting from the claimant will be useful in this regard. A
home visit or specialist assessment of Mr Smith’s functional abilities might also be useful.
The validity of the claim will depend on the claimant’s symptoms, and how these limit his ability to
perform the occupation or tasks stated in the definition of disability.
It will be necessary to get a full account of the nature and severity of his symptoms. These are
likely to include tremor, muscular rigidity or stiffness, bradykinesia (slowness of movement),
tiredness, depression, and difficulties with handwriting, speech, and balance.
In the early stages of the disease, the claimant may be able to continue with their occupation and
usual activities and could do so for several years with appropriate treatment. If this is the case
then the waiver claim may not be valid so soon after the recent diagnosis.
The nature of the occupation, the rate of progression and response to treatment will be influential
factors. Tasks requiring a high degree of dexterity or concentration will be difficult as the disease
progresses.
Aids and adaptations may improve the claimant’s functioning, particularly for non-manual tasks
but ultimately most forms of work will be impossible, and the waiver claim will remain valid to
expiry of the policy or earlier death.
The CI claim will need to be assessed against the definition of Parkinson’s disease in his policy
conditions. This will typically require that
the diagnosis occurred before a stipulated age ;
the diagnosis has been confirmed by a consultant neurologist. There is no one test to
confirm the diagnosis, so the diagnosis is made on clinical grounds and by excluding
other causes of the various symptoms. PET, SPECT, DAT and MRI scans may have
been undertaken to support the diagnosis and/or exclude other causes. A positive
response to the initiation of dopamine treatment is often considered to be further
supportive of the diagnosis;
there is permanent clinical impairment of motor function, with tremor, rigidity of
movement and postural instability.
A report from the treating neurologist, along with an overview of limitations obtained for
assessment of the waiver of premium claim should help to determine if the definition is met.
The assessor should also check that no relevant exclusions apply – the latest ABI definition
excludes disease secondary to drug usage, or Parkinsonian Syndromes.
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