1 : 10 - Other Insurance-Based Protection Products Flashcards
Be able to analyse the main features of other insurance-based protection policies: personal accident and sickness insurance; private medical insurance, hospital plans and dental insurance; payment protection insurance – mortgage, credit
How varied is Private Medical Insurance (PMI)?
There are many different types of PMI, from budget plans with low costs, high excesses and limits on cover, to comprehensive plans which are the most costly but which provide the fullest cover.
What is a hospital cash plan?
These pay a fixed cash sum for each day spent in an NHS hospital, plus fixed cash sums for specified treatments including optical and dental treatment.
What tax is PMI subject to?
PMI is a general insurance contract subject to insurance premium tax (10%).
What is PMI generally used for?
For anyone who would like more control over the timing of medical procedures for acute illnesses.
Also for those who do not wish to be treated on a ward in an NHS hospital but would prefer the comfort and luxury of a private room.
What 3 types of PMI policies are there?
- package
- choice of cover
- limited cover (or the budget)
What is a ‘shared risk’ plan?
Where the insurer pays up to a specified level and the client then pays the rest of the amount.
What is Payment Protection Insurance (PPI)?
PPI can cover monthly loan repayments if a client’s salary drops due to accident, sickness or unemployment, for a fixed period of time.
PPI will pay out a sum of money to help cover monthly repayments on mortgages, loans, credit/store cards or catalogue shopping payments
What is PPI sometimes known as?
Accident, Sickness and Unemployment (ASU) insurance, account cover or payment cover.
Why has PPI recently been at the centre of mass mis-selling claims?
Due to it automatically being added to such things as loans, without giving due care to see if the policy was suitable for the purchaser.
What are typical benefits for PPI cover?>
- Mortgage – covers monthly mortgage repayments for a set period of time.
- Credit and store cards – generally pays off a percentage of the outstanding balance or the minimum payment each month for up to a year.
- Loans – covers monthly repayments for the loan.
How long does PPI pay out for?
Only a set period of time, usually 12 months.
What should the firm provide prior to taking cover?
A policy summary
What should a policy summary include?
The key features and benefits, as well as any significant or unusual exclusions or limitation.
Do interest rates and annual percentage rates (APRs) for loans, mortgages and credit/store cards usually include the cost of the PPI policy?
No.
The cost of the insurance must be quoted separately from the cost of the loan, over the life of the policy.
