1 Market factors and trends in financial protection planning Flashcards
In terms of impact and frequency, what type of risk should you take out insurance for?
High impact and low frequency
What types of events would fall in to the high frequency and high impact box of the matrix?
unemployment
What types of events would fall in to the low frequency and high impact box of the matrix?
death, serious illness
Name 3 changes in society which have meant that attitudes to protection have also changed
Consumerism - people prioritise buying other things
The welfare state - people believe that state cover is enough
Change of typical family models - 2 breadwinners not 1, single families
Technocoligical advances in the purchase of protection
In general, why do many people not take out protection policies?
Do not fully understand the product
Already believe they have enough cover
People would rather spend money on somethibng else
Why are less people now buying protection from advisers?
A lack of trust, also availability of buying through the internet
What are some of the main things that can influence the demand of life assurance sales?
Affordability - whether people can afford it
If people have dependants
The wider econominc climate
What is the life assurance protection gap and how much is it estimated to be?
The shortfall people have with their existing life cover, versus what they actuall need
Amount in £2.4tn
Why is the size of the life assurance protection gap a concern for the government?
If people can not adequately cover themselves they become burdens on the state
why does the housing market influence a demend for protection products?
People who take out mortgages need protection (life, CIC), if the housing market is subdued then more protection will be taken out etc.
Which economic factors drive a demand for life protection products and why?
Income per capita - if earning more, more need for protection
Inflation - less people take out protection as inflation rises
Which health trends have caused a rethink in health insurance pricing over the last 60 years?
Less smokers
More emphasis on physical fitness
better health education
Why does an ageing population cause an issue for health insurance underwriters?
As people live longer they’ll have to work for longer & will need more cover - insurers have to write policies for longer and assume more risk
What are some of the problems that can arise if clients buy a protection product directly and not through an adviser?
Clients may not buy appropriate cover
May not buy right type
May not be written in to right trust
What are 3 of the most important recent trends in life insurance design & pricing?
Commoditisation - buying through comparison portals
Less expenses for insurers - more attractive premiums
Smoker/ non smoker policies - made more people quit
preferred life policies - offering people lower premiums if they can prove they’re healthier
Should the cost of living increase, what would be the expected percentage of people who would consider cancelling their health insurance?
a.
10%.
b.
20%.
c.
40%.
d.
30%.
a. 10%
Improvements in hygiene, health care and education have resulted in:
a.
no significant change to mortality or morbidity.
b.
declining rates of mortality.
c.
improving rates of mortality.
d.
improving rates of mortality and declining rates of morbidity.
c.
improving rates of mortality.
