Free Practice Questions for NZ Level 5 Life, Disability and Health Insurance

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NZ Certificate in Financial Services (Level 5) — General Insurance Strand (New Zealand)

Practice Questions100 questions

Sample NZ Level 5 Life, Disability and Health Insurance Practice Questions

Try these sample questions to review concepts for the NZ Level 5 Life, Disability and Health Insurance exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which New Zealand regulatory body is responsible for issuing Financial Advice Provider (FAP) licences and overseeing conduct in the financial services market?

A.The Financial Markets Authority (FMA)

B.The Reserve Bank of New Zealand (RBNZ)

C.The New Zealand Qualifications Authority (NZQA)

D.The Commerce Commission

Explanation: The Financial Markets Authority (FMA) is the conduct regulator for New Zealand's financial markets. It is responsible for licensing Financial Advice Providers (FAPs) and enforcing compliance under the Financial Markets Conduct Act 2013.

2Under Section 431I of the Financial Markets Conduct Act 2013, what must a financial adviser prioritize when giving financial advice to a retail client?

A.The financial interests of their Financial Advice Provider (FAP)

B.The client's interests

C.Maximizing their personal commission income

D.The commercial targets of the insurance product provider

Explanation: Section 431I of the Financial Markets Conduct Act 2013 creates a statutory duty to give priority to the client's interests. Advisers must take all reasonable steps to ensure their advice is not influenced by their own interests or those of the FAP.

3Under the Accident Compensation Corporation (ACC) scheme in New Zealand, what is the maximum percentage of pre-injury weekly earnings covered for a disabled worker?

A.60%

B.70%

C.80%

D.100%

Explanation: ACC weekly compensation pays up to 80% of a client's pre-injury weekly earnings if they are unable to work due to an injury covered by the scheme. This payment is subject to a statutory maximum cap which is adjusted annually.

4Which of the following conditions is generally NOT covered by the Accident Compensation Corporation (ACC) weekly compensation scheme in New Zealand?

A.A broken leg sustained during a weekend sports match

B.A neck strain caused by a workplace lifting accident

C.A long-term disability caused by a degenerative cardiovascular disease

D.A concussion resulting from a slip and fall at home

Explanation: ACC covers personal injuries caused by accidents, work-related gradual process conditions, and medical treatment injuries. It does not cover illnesses, diseases, or degenerative conditions (like cardiovascular disease), which require private insurance cover.

5What type of life insurance is designed to pay out a lump sum only if the life assured dies within a specified timeframe?

A.Whole of Life Insurance

B.Endowment Insurance

C.Term Life Insurance

D.Trauma Insurance

Explanation: Term Life Insurance provides cover for a fixed term (e.g., 10 years or up to age 65). If the life assured survives the term, the cover expires and has no cash value.

6In New Zealand, what is the effect of an accelerated trauma benefit payout on the main life insurance policy?

A.It cancels the entire policy immediately, including all other riders

B.It reduces the life insurance sum assured by the amount paid out under the trauma claim

C.It increases the life insurance sum assured by 50% to cover additional medical costs

D.It has no effect on the life insurance sum assured, which remains fully intact

Explanation: An accelerated trauma benefit means the trauma rider is linked to the main life cover. When a trauma claim is paid, the life cover sum assured is reduced by the payout amount. If the trauma payout equals the life cover, the life cover is fully extinguished.

7In New Zealand health insurance policies, how is a 'pre-existing condition' generally defined?

A.Any medical condition that first develops after the policy's cooling-off period

B.Any illness or symptom that existed before the commencement date of the policy

C.A condition that is genetically inherited but has not yet shown any symptoms

D.An accidental injury that occurs within the first 14 days of policy issuance

Explanation: A pre-existing condition is any illness, injury, or symptom that the insured had, was aware of, or received treatment/advice for before the policy began. Insurers typically exclude these or charge loadings to cover them.

8In a New Zealand income protection policy, what is the 'wait period'?

A.The time between submitting an application and receiving policy approval

B.The duration of disability that must pass before benefits start to accumulate

C.The period of employment required before a client can purchase income cover

D.The time the insurer has to assess a claim before making the first payment

Explanation: The wait period (or elimination period) is the initial period of disability during which no benefit is payable. Common wait periods in New Zealand range from 14 days to 90 days or even 2 years.

9In a New Zealand income protection policy, what does the 'benefit period' represent?

A.The timeframe within which the client must submit a completed claim form

B.The maximum duration for which disability benefits will be paid for a single claim

C.The length of time the insurance company guarantees the premium rate will not rise

D.The time between when a policy lapses and when it can be reinstated without underwriting

Explanation: The benefit period is the maximum length of time the insurer will pay monthly benefits for a continuous disability claim. Typical options in New Zealand include 2 years, 5 years, or up to age 65.

10Under New Zealand law, at what point does the duty of disclosure apply to a prospective policyholder seeking personal insurance cover?

A.Only after the policy has been active for a period of 12 months

B.From the start of the application process until the insurer accepts the risk and issues the contract

C.Only when a policyholder submits a formal claim for benefits

D.During the cooling-off period only

Explanation: The duty of disclosure requires the applicant to disclose all material facts to the insurer from the initial application up until the contract is finalized and issued. Failure to do so can allow the insurer to avoid the contract.

About the NZ Level 5 Life, Disability and Health Insurance Exam

The New Zealand Certificate in Financial Services (Level 5) with the Life, Disability, and Health Insurance strand is the benchmark qualification a New Zealand insurance adviser needs to provide regulated personal insurance advice. It pairs a Core Knowledge component on the financial advice regime with a strand covering personal risk management, life, disability, trauma, and medical insurance products, needs analysis, underwriting, policy ownership, claims, and compliance duties.

Exam sponsor: NZQA qualification delivered and assessed by approved training providers such as Strategi Institute, Open Polytechnic, Professional IQ College and the New Zealand College of Business.. The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

A competency-based NZQA Level 5 qualification made up of a Core Knowledge component plus the Life, Disability and Health Insurance strand. Assessment is set by the approved provider and typically combines multiple-choice and applied tasks across all learning outcomes.

Time Limit

Set by the provider; the qualification has around 650 hours of notional learning across the Core component and the strand and is completed at the candidate's pace.

Passing Score

Competency-based; each NZQA-approved provider requires candidates to demonstrate competence across all learning outcomes rather than meeting a single fixed percentage. Confirm the standard with your provider.

Exam / Certification Fees

Set by each approved provider and varies by module and enrolment option. Confirm current fees directly with your chosen provider.

Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Official sources

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

20%

Financial Advice Regime & Code of Conduct

The FMCA advice regime, FAP licensing by the FMA, adviser disclosure duties, and the Code of Professional Conduct for Financial Advice Services.

18%

Life Insurance Products and Structures

Term life, whole of life, endowment, joint life policies, policy ownership structures, key person life cover, and partnership/shareholder buy-sell agreements.

16%

Disability, Income Protection & Business Cover

Income protection (indemnity vs agreed value), mortgage and redundancy cover, wait/benefit periods, offsets (ACC, sick leave), and key person disability.

14%

Trauma, Critical Illness & TPD Cover

Trauma insurance, stand-alone vs accelerated benefits, medical definitions, and Total and Permanent Disablement (TPD) own/any occupation definitions.

12%

Health and Medical Insurance

Medical insurance, surgical vs non-surgical cover, pre-existing condition exclusions, primary vs secondary care, and public health system interaction.

11%

Risk Management, Needs Analysis & Underwriting

The six-step advice process, calculating sum assured (needs analysis vs human life value), medical/financial underwriting, exclusions, loadings, and reinsurance.

Operational Lifecycle & Legal Obligations

Duty of utmost good faith, non-disclosure consequences under the Insurance Law Reform Act, claims processes, policy maintenance, and dispute schemes (IFSO, FSCL).

Preparing for the NZ Level 5 Life, Disability and Health Insurance Exam

What You Need to Know

Passing score: Competency-based; each NZQA-approved provider requires candidates to demonstrate competence across all learning outcomes rather than meeting a single fixed percentage. Confirm the standard with your provider.
Assessment: A competency-based NZQA Level 5 qualification made up of a Core Knowledge component plus the Life, Disability and Health Insurance strand. Assessment is set by the approved provider and typically combines multiple-choice and applied tasks across all learning outcomes.
Time limit: Set by the provider; the qualification has around 650 hours of notional learning across the Core component and the strand and is completed at the candidate's pace.
Exam / certification fees: Set by each approved provider and varies by module and enrolment option. Confirm current fees directly with your chosen provider. Official sources

Using Our Practice Resources

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NZ Level 5 Life, Disability and Health Insurance: Suggested Study Strategy

1Understand the regulatory framework thoroughly: be clear on the Code of Professional Conduct (particularly Duties 1 to 9), FAP disclosure requirements, and the consequences of adviser non-disclosure.

2Master the difference between key insurance products: know when to recommend trauma vs TPD, term vs whole of life, and indemnity vs agreed-value income protection.

3Learn the underwriting process and policy lifecycle, including the duty of utmost good faith, non-disclosure rules under the Insurance Law Reform Act, and how ACC offsets impact disability benefit payouts.

Frequently Asked Questions

What qualification do I need to provide personal insurance advice in New Zealand?

The benchmark is the New Zealand Certificate in Financial Services (Level 5) with the Life, Disability, and Health Insurance strand. It pairs a Core Knowledge component with the specialist insurance strand and is the competence standard referenced under the Code of Professional Conduct for Financial Advice Services.

Who delivers and assesses the Level 5 insurance qualification?

It is an NZQA qualification delivered and assessed by approved training providers such as Strategi Institute, Open Polytechnic, Professional IQ College and the New Zealand College of Business. Each provider sets its own assessment format, which commonly includes multiple-choice and applied tasks.

What key topics does the Life, Disability and Health Insurance strand cover?

It covers risk management concepts, personal insurance products (life, income protection, trauma, medical, TPD), the six-step financial advice process, policy structures, underwriting, claims, and the regulatory environment under the FMCA and Code of Conduct.

Is there a national exam or pass mark for this qualification?

No single national exam or passing percentage applies. The qualification is competency-based, meaning provider-specific assessments (combining knowledge tests and assignments) require candidates to demonstrate competency in all learning outcomes. Confirm assessment details with your chosen provider.