Every protection recommendation in R05 is a subtraction. Work out what the household needs, take away what already arrives without any new cover, and insure the difference. State benefits are the part candidates skip, which is why they end up recommending too much cover, or fail the question that asks how existing provision affects the advice.
Sickness and incapacity
Statutory sick pay is £123.25 a week for up to twenty eight weeks, available to employees whose average weekly earnings reach the lower earnings limit of £129 a week. It is not available to the self employed, which is a standing exam point.
Employment and support allowance applies where incapacity continues and the client has the necessary national insurance record. Following a work capability assessment, a claimant is placed either in the work related activity group or the support group, with an additional amount for the support group. The assessment phase and work related activity rate is £95.55 a week, and support group claimants can receive up to £145.90 a week. Contributory awards for the work related activity group are time limited to twelve months, while support group awards are not.
Universal credit is the means tested backstop, made up of a standard allowance plus elements for children, housing, childcare, limited capability for work and caring. It is reduced by a taper as earnings rise, and capital above £16,000 rules a claim out entirely, with capital between £6,000 and £16,000 producing a deduction. That capital rule is the reason a client with modest savings often has no safety net at all.
Personal independence payment is different in character, because it is neither means tested nor earnings related. It is paid on the basis of daily living and mobility needs, each with a standard and enhanced rate.
Death
Bereavement support payment provides a lump sum followed by monthly instalments for up to eighteen months, at a higher rate where the survivor is entitled to child benefit. It is not means tested and is not taxable, but it is short lived and modest, so it rarely changes a life cover recommendation by much. Note that it is available to cohabiting parents with dependent children in certain circumstances, and that a claim must be made within a limited window to receive the full entitlement.
Widowed parent allowance has been replaced for new claims, so answer on bereavement support payment unless the question tells you otherwise.
Retirement and long term care
The full new state pension is £241.30 a week, £12,547.60 a year, and requires thirty five qualifying years for the full amount and ten years for any entitlement. In protection scenarios it matters because a surviving spouse who is close to state pension age may need less income cover than a client in their forties.
Turning benefits into a recommendation
Use a simple grid. It works in the exam and it works in practice.
| Step | Question to answer |
|---|---|
| 1 | What income does the household need each month if the risk event occurs? |
| 2 | What arrives automatically? Employer sick pay, group scheme, state benefits |
| 3 | What can savings provide, and for how long? |
| 4 | What existing cover is already in force, and is it assigned or in trust? |
| 5 | What is the remaining shortfall, and for how long is it needed? |
The answer to step five is the sum assured or benefit level, and the term follows from the period of need, whether that is to the youngest child leaving education, to the end of the mortgage or to the intended retirement date.
Where candidates lose marks
- Assuming the self employed receive statutory sick pay
- Ignoring the £16,000 capital limit that removes universal credit for savers
- Treating state benefits as adequate rather than as a floor
- Forgetting that group scheme income protection is taxable while personal policy benefit is not
- Recommending cover to the full income figure without deducting what already exists
Keeping the figures current
Benefit rates change every April. Learn the structure and the relationships first, because those are what the examiner tests, then refresh the exact figures shortly before your sitting. A candidate who explains the interaction between sick pay, a deferred period and universal credit will always outscore one who has memorised numbers without the reasoning.