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A funeral policy has a six-month waiting period for death from natural causes. The representative never mentions it. The insured dies of an illness in the third month and the claim is rejected. Which statement is correct?

RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.

  1. a) He breached the Code only if the client had asked him whether a waiting period applied.
  2. b) He complied with the Code, because waiting periods appear in the policy document the client received.
  3. c) He complied with the Code, because disclosure duties apply only to Tier 1 financial products.
  4. d) He breached the Code, which requires waiting periods, exclusions and similar restrictions to be disclosed.Correct

Why this is the answer

A provider must give concise details of any special terms or conditions, exclusions of liability, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided, before the client transacts. The duty does not depend on the client asking, a later policy document does not replace it, and it applies to every financial product, including Tier 2 products.

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