1: Market Factors and Trends in Financial Protection Planning Flashcards
What are the 2 main ways to manage risks in financial planning?
Managing (i.e., not leaving cash out unattended near your unlocked front door)
Insuring (i.e., burglar breaks in through your locked door and takes all your valuables while you were not home)
How are risks typically categorised in financial planning?
By their severity of impact and likelihood of occurrence.
Based on the frequency and impact matrix, what type of risks should be the top priority for insurance-based solutions?
High-impact but low-frequency risks, such as premature death or serious illness.
Why did door-to-door insurance agents become less common over time?
The method became too expensive
What triggered the decline in level term non-advised sales in 2022?
The cost-of-living crisis
The shortfall in the amount of cover necessary to maintain the current living standards of dependants, is also known as what?
Protection gap
What is the protection gap formula?
Resources needed – cover in place through existing policies = protection gap
What is morbidity?
“The relative incidence of a particular disease” (in other words, how often a specific disease occurs within a certain group of people, compared to others)
What is the connection between morbidity and mortality?
The link is unclear.
When were insurers stopped from charging different premiums for male vs. female policyholders?
Since 21 December 2012
What is the Caxton House Statement?
BIBA’s signposting agreement to improve access to protection products.
How does BIBA’s agreement help consumers?
Firms refer customers they cannot serve to specialists who can assist.
What market distortions can occur if preferred life policies are developed?
Difficulty in comparing costs, and advisers will struggle too due to complexity of the marketplace
