1 Flashcards
What is the maximum insurance allowed after divorce?
Limited to the amount of the maintenance
‘Free cover’ within the workplace
The amount of insured benefit allowed without
medical underwriting. Provided all eligible employees join the scheme.
Welfare reform act 2012 introduced what 2 things?
Benefits cap and transition to Universal Credit
Twin system of benefits
UC and old (legacy) benefits
Payments for bereavement support with and without dependents (From April 2017)
With - £3,500 lump sum then £350 monthly for 18 months
Without - £2,500 lump sum then £100 monthly for 18 months
Not included in benefit cap
Bereavement support
Taxable benefits
Bereavement allowance weekly benefit
Job seekers allowance
SSP
Contribution based ESA
Carers allowance
Bereavement allowance (pre-April 2017) payments
Payment of £2,000 on death and weekly benefit of £126.35 when death caused by job, satisfactory NIC or survivor is entitled to child benefits
What age can you receive income benefit, max hrs a week and max savings?
Age 16 and £16k and working less than 16th a week
Job seekers allowance
Min age 18, NIC dependent and payable for 6 months max
SSP
Must be sick for 4 days in a row, payable for 28 weeks (unless have shielding letter)
Employment and support allowance
Unable to work due to illness or injury. Two types contribution based which is taxable and means tested which is not taxable
PIP
Over age 16, where the person must have difficulty with daily living activities that has lasted 3 months and will last atleast 9 months. Comprising of two components:
- daily living component
- mobility component
Disability Living allowance
Not means tested or dependent on NIC. Has two components of care and mobility.
Criteria of must have for 3 months and likely to be for a further 6 months
Attendance allowance
Those over SPA who have suffered from a severe disability for 6 months or longer. Must normally show that they require care. Not means tested or NIC dependent
Carers allowance
Must care for someone severely disabled receiving DLA, PIP or attendance allowance. Cater must not earn over £132pw or be in full time education
Child benefit
For those caring for a child under 16 or under 20 in full time education. Not NIC dependent and not means tested
High income child benefit charge
Child benefit is withdrawn for high income households. Where one person within the household earns over £50k net
What is the high income child benefit charge?
1% of the amount of child benefit for every £100 over £50k net pay
Tax credits paid and administered by?
Paid by HMRC and admin. By DWP
Tax credits depends on?
Income of household
Working tax credit
Top up of earnings for people working on low incomes
Support for mortgage interest
Apply for a loan for interest on mortgage to be paid with interest on the loan when house is sold, ownership transferred or death this will be repaid
Support for mortgage waiting period?
39 weeks
What did UC replace?
Income support
Income based JSA
Income related ESA
Housing benefit
Child tax credit
Working tax credit
UC standard allowance payment?
£334.92 for single adult over 25
Benefits cap starts with which benefit originally?
Housing benefit
Benefits cap does not apply to households earning what?
WTC, carers, support or injuries benefits
Benefits cap level
£20k for couples with children
£13,400 for single people with no children
How many years NIC to earn full new state pension?
35yrs
What is the state pension age to be in 2026?
67
Could individuals opt out of SERPS pension and S2P pension?
Yes
What would happen to NIC when opted out of SERPS and S2P?
Receive refund of NIC or discounted NI payments
What is protected payment for pensions
NI payments for SERPS and S2P are protected
Is it possible to opt out of new state pension?
No
State pension credit 2 parts
Guarantee credit - guaranteed min. Level of income
Savings credit - if turn 65 pre 6th April 2016 then get 60p for every £1 of income above £158.47 and £25-.70 for a couple. Withdrawn to 40p thereafter.
What is classed as a dependents pension
Bereavement support payment and it’s predecessor’s bereavement allowance, widowed parent allowance.
Can a partners SPA be claimed for pre 6 April 2016 if partner dies? If so would it be on top of theirs or replace it?
Yes, will replace their own
If one person of couple reaches SPA prior to 6 April 16 and other partner after this date. Can they claim the partners SPA?
Yes
If both partners reach SPA after 6 April 2016 can they claim their partners SPA?
No, but may be passed on 50% of any protected payment that exists
Whole of life policy
Regular premiums with policy having no end date then sum assured paid upon death
Unit linked whole of life policy
- maximum cover
- standard cover
- guaranteed cover
Aspect of life insurance and investment, premiums will be reviewed usually every every 10yrs
Maximum - premiums sent at required amount and client can then review increasing cost of cover in line with age every 10yrs
Standard - premium set so no increase in persons lifetime providing fund meets a pre- determined rate of investment return
Guaranteed - There is a guaranteed level of cover throughout life in return for a guaranteed level of premiums with no investment aspect
What are whole of life policies ideal for?
Covering funeral expenses
bond
Purchase units with a single premium which goes into an investment fund with a management fee and the bond also has a small aspect of life cover which is usually 101% of bid value for units.
Unit linked/with profits bonds
Offering return based upon the performance of a fund/funds
Guaranteed income bonds
Guaranteed level of income to investor
Guaranteed growth bonds
Guaranteed level of growth
Mortgage protection insurance
Life assurance decreasing in line with mortgage
Family income benefit
A monthly income paid in the event of death until fixed future point
Gift inter vivo term assurance
Where the sun assures falls in line with IHT payable on any potentially exempt transfers
Return of premium term assurance
Gives premiums back should the individual survive beyond term of policy
Convertable term assurance
Can convert to a more permanent policy eg whole of life policy
Pension term assurance
Could benefit from tax relief for term assurance prior til April 2016
Multi plan assurance
Have multiple forms of cover within with more flexibility of changing the policy
Level premium system for assurance
Level premium throughout term of policy. So overpaying early to under pay later on
Calculate mortality rate
Mortality rate for age X Sum assured
Pure premium meaning
Premium required to pay for claims for that year under level premium system
Premium loading meaning
Costs and charges on top of mortality rate eg cost of life office etc.
Benefits of life policy in trust
Receive proceeds quickly
Possible IHT benefits
Can ensure sun is distributed properly
Better protection if settlor goes bankrupt
Nominated on a policy
Chose a person to nominate as beneficiary and means this does not form part of estate on death
Where do you register trusts if needed?
HMRC
What qualifies as exempt from tax and from registering trust?
On death, terminal illness, CI or temporary disablement of assured
Meet cost of healthcare
How long before funds being distributed for a policy must be distributed before needing to be registered?
2yrs
Tele underwriting categories
Big T - questions asked over the phone
Little T - questions asked on application form
GDPR age for which parental consent is not required to process data?
13
Who enforces GDPR
Information commission officer
Max fine for ICO
Greater of £17.5mil & 4% of annual global turnover
Sensentive personal data
Characteristics, views, health eg sex life, ethnicity, politics
GDPR 6 lawful bases for processing data
1 consent
2 contract
3 legal obligation
4 vital interests
5 public task
6 legitimate interests
Where must al l companies report breaches of GDPR?
ICO and in some cases individual
When does non disclosure effect policy claim?
If non disclosure would have effected the underwriting outcome
Can an insurer trawl a customers medical records hoping to uncover non-disclosure?
No
Types of notice
Constructive notice
Importance of notice
Form of notice
Effect of notice
Absolute assignment
Complete transfer of a policy by way of sake or gift
Maturity date
When an endowment matures
Consumer insurance act 2012 changed what for insurance applicants?
Changed disclosure from applicant volunteering info. to emphasis on ensure to ask right questions to elicit information
Consumer insurance act 2012 must insurer pay claim for the below:
- reasonable misinterpretation
- careless misinterpretation
- Deliberate or reckless misinterpretation
- R - Insurer must pay claim
- C - proportionate remedy for if insurer knew facts
- D - insurer can refuse to pay
Is proof of title required before a claim is paid?
Yes
Grants
Grant of probate - will
Grant of administration- intestate
Joint life first death and second death payments
First death - payment made to surviving assured
Second death - paid to estate of second death
If two people die at the same time who’s estate would a life policy go to?
The younger of the two people
Can a successful life insurance claim be made for suicide with and without mental capacity?
Usually no if has mental capacity and yes if does not have mental capacity
Unlawful acts when looking at in regards to life insurance
A person cannot benefit from unlawful act
Will a life office pay if a policy is lost?
Yes
Does a change of gender effect a claim for a life policy?
No
Is a unit linked IP product under COBS or ICOBS
COBS
Holloway IP product
build up a cash value at retirement along with profits. Usually from a building society
IP occupational classes 1-4
Class 1 - managerial, professional jobs
Class 2 - shop assistant
Class 3 - manual
Class 4 - heavy manual
Can a policy waive the deferred period if a client returns to work but relapses under the same condition?
Yes
Who are group IP policies paid to?
From life office to employer then to employee
When is IP taxed and tax free?
Tax free in all cases other than a group policy where it is paid to the employer tax free then taxed when paid to the employee with usual NIC’s
Split benefit trust is used for what?
CIC
Split even for trust
The death benefit is held in trust for beneficiaries, and the critical illness benefit is held for the absolute benefit of the insured person if there is a claim
Survival period with CIC
A person must survive so long when CIC only policy
Life cover buy back clause on CIC
allow for a restricted form of life cover to be taken out without the need for further medical underwriting as would otherwise be difficult get life cover
Reinstatement cover for joint policy
In the event of two clients splitting up the policy can be split into two single policies or continue as a sole policy in the event of a claim of one of the two policy holders.
When is CIC taxable?
When a group policy and paid to employer as will be taxable as a benefit in kind
Long term care is required when?
Cannot carry out activities of daily living
Who regulates long term care policies
FCA
Is nursing care means tested or taxed?
No and no
Who is NHS funded care paid to?
Directly to nursing home
Attendance allowance
individual pays their own care fees, they can claim Attendance Allowance fi they need help with personal care and/or supervision.
Who pus attendance allowance
DWP
Who is responsible for free care and who pays for care?
Local authorities
Personal expenses allowances for care
person with a sum of money to cover some their own personal expenses such as newspapers and toiletries.
When will a home not be used to cover care costs?
The resident’s partner, former partner or civil partner (except where the resident is estranged or divorced from the spouse or civil partner);
A lone parent who is the claimant’s estranged or divorced partner;
A relative of the resident or member of the resident’s family who is aged 60 or over or is a child of the resident aged under 18 or is incapacitated.
When can and can’t a local authority use an asset passed on to cover care costs?
If was done to avoid paying care costs
it would not be reasonable for a local authority to infere if the gift was made a at a time when the donor was in good health and did not anticipate care
What is the time limit for an asset to not be considered when sold for covering care costs?
No set time limit
Immediate needs plan for care
If the individual is in poor health and already needs care, or is about to go into a nursing home, it is possible to buy a single premium policy that wil begin paying for care immediately. These policies continue to pay out for as long as the person needs the care with no time limit.
Pre funded investment linked policy for
care
Both an investment bond and care policy so will pay for care and pay a sum to beneficiaries on death
Care cash plan
Acare cash plan provides cover against the future possibility of needing care. It pays out a cash sum and/or an income for a set period. Preset benefit received so may or may not cover care costs.
Viatical settlement
sale of an existing life assurance policy by a terminally ill person for reduced amount from sun assured to an intermediary. Then intermediary is paid full sum on death of seller.
What is the only thing to effect a lasting power of attorney?
Bankruptcy stops health and welfare decisions
Lasting power of attorney
Decisions for health and welfare and financial decisions
Where do you register a lasting power of attorney?
Office of public guardian
Personal accident and sickness taxation
There is no tax relief on premiums or taxation on benefits for a PAS policy paid by an individual.
Chronic and acute medical conditions
C - long-lasting and usually incurable
A - Rapid onset and are usually amenable to cure. Treatment is normally of short duration and will often resolve the condition
Private medical insurance 4 principles
- All definitions included in policy docs
- All customers get information mandated
- Explanationsmust be given of core terms and conditions appropriate to the customer’s circumstancesand in plain and intelligible language.
- Customers must get specific information, generally at point of sale.
Private medical insurance types:
Basic
Standard
Comprehensive
Excess and co-payments
B - low costs, no extra benefits and limits on the cover for different types oftreatment:
S - give wider cover, as more items are covered, with longer claim periods and higher limits. Additionally, there is often a wider choice of hospitals and outpatient treatment
C - give the fullestcover. Claim periods can be longer, with higher limits and often a wider choice of hospitals. Services such as home nursing and private ambulances are covered.
E - excess whereby the insured has to pay the first £x of any treatment.
Private medical insurance cover abroad?
No
Health cash plus
low-cost healthcare plans that pay up to 100% of the cost of treatment up to a preset annual limit or towards specified treatments, including optical and dental services. They may also pay a fixed cash sum for each day spent in hospital and a range of other benefits.
Key persons insurance
any person whose contribution to
the business is significant is lost through illness, death or injury eg director or employee
How to calculate how much cover for key persons insurance
Cost of replacement and financial implications of loss of profits
Two methods of calculating key persons insurance
- multiple of salary
- proportion of profits formula
Salary x number. Eg salary x 5
(Key person’s salary × gross profit for last year × no. of years to replace key person)
/
Total salary bill
When does proportion of profits formula not work for calculating key persons insurance?
When company making a loss
Term assurance 2 general tax rules
• Tax relief is given on most term assurance premiums.
• If tax relief is given on premiums, the benefits are generally taxed.
Share protection insurance
provides funds to buy the company shares if a shareholder dies or becomes seriously ill
Buy and sell agreement within a private limited company
The agreement provides that the deceased’s heirs must sell their shares in the business to the surviving shareholders, and that the latter must buy
Cross option (double) agreement
The shareholders of the business have an option to buy the shares from the estate of a deceased shareholder, and the estate has an option to sell the shares.
The options will typically be exercisable within specified periods, e.g. three or six months from death
Automatic accrual
Essentially leave the shares to their fellow shareholders in their wills. Usually director would look after family by taking a life policy to compensate for this but may not be sufficient if share price increases
2 reasons why place your own life in trust for purpose of company shares
- The co-directors if the shares are to be bought; or
- The family if the shares are transferred to fellow directors in the will.
What must a policy be for it to avoid IHT?
Must be an outright gift
Can more than one valid claim be mae for a group CI policy?
Yes providing the illness progresses in severity
What type of condition is private medical insurance designed to cover?
Acute conditions
Capitation scheme for a dental plan
People to budget their dental costs
Most appropriate trust for a life and CI policy?
Split trust
Means tested state benefits means testing what?
Capital and income only
Maximum income before any income benefits are reduced
£6k
Hitting their retention limit for life assurance means life office would do what?
Reassure risk
Low cost whole of life policy
Decreasing term assurance and with profits policy
Equitable ownership of a policy is given to who?
The beneficiary
Why use a split trust for a life and CIC policy?
The assured will receive CIC benefit
Private medical insurance opened on a moratorium basis mean what?
Certain pre-existing conditions will be excluded for a defined period
Key persons insurance can be paid in what kinds of form?
Life insurance, CIC, IP
In order to claim on an insurance policy what 2 documents must you have?
Deed of assignment and policy document
How long does an immediate needs care plan pay out for?
Aslong as person requires care
When is an immediate long term care policy tax free?
When paid directly to the care provider
Care cash plan
Pays a fixed lump sum or income for set period of time if require care but no link between amount and cost of care
