12) Health and general insurance Flashcards
What is Critical Illness Cover?
Insurance which pays out a lump sum to meet additional costs arising from an illness. ( illness may not be terminal)
What does Critical Illness gen cover?
Most forms of cancer, heart attack, stroke, coronary artery disease req surgery, major organ transplant, MS, kidney failure
Sometimes may cover - paralysis, loss of limb, blindness
What may C Illness cover be used for?
Mortg repayment, alterations to liv accommodation, long term care in home/hosp, medical equipment, enhancing quality of life etc
What is Income Protection Insurance?
IPI pays an income when accident or illness prevents a person from earning a living from their normal occupation.
How are premiums det for IPI?
By occupation: Class 1 - Clerical, admin, professionals
Class 2 - Low risk eg hairdressers,
pharmacists
Class 3 - Mod risk eg farmers,
electricians
Class 4 - Highest risk of accident or
health problems eg Manual
labourers, industrial chemists
Other factors are age, amount of benefit, current health and past medical history, length of deferred period
Premiums are either
1) Reviewable - low premium to start, but reviewed reg to assess changes in circumstances
2) Guaranteed premiums - Fixed premium, usually more expensive, but guaranteed for the life of the policy
Premiums cd be waived while benefits are being paid
When and how are benefits paid in Income Protec Insu
Usually after deferred prd - 4, 13, 26, 52, 104 wks
Self-employed have short deferred prd. Others can start when sick pay ben ceases.long defer-prem small
Ben from insu should not be greater than previous earnings - usually 50 - 65% of earnings paid, sometimes 75%(group policies) OR pro rata if policy holder can earn by working part time/ lower job.
Continued payment till policy ends, dies or retires -
CAN CLAIM MULTIPLE TIMES AND INSURER CANNOT CANCEL POLICY - unless premiums not paid.
Indiv policy - tax free
Group policy - When employer passes on proceeds of claim, then pays IT and NI
What is Accident, Sickness and Unemployment Insurance (ASU)?
Also called AS and Redundancy Insu as it does not pay if policyholder resigns or dismissed.
Usually deferred prd is one month - and for limited prd, usu 2 years
Usually covers mortgs, lump sum on death, disablement or loss of limb
What are some restrictions to ASU Insurance?
- Shd be actively and conti employed for a min prd
- No redundancy pending when policy taken out
- Not paid if made redundant within a certain prd
- Have to be employed for a certain prd before they can take out policy
All ben are tax free, but contri are taxed when taken out on personal basis
What is Private Medical Insurance
Usu reimburses:
*in-patient charges - accommmo, drugs, pvt ambu,
operating fees, nursing fees etc
*surgical & med fees - pathology, radiology, surgeon fees, anaesthetist’s fees etc
*out-patient fees - consultation, radiology, pathology etc
Indi or gp arranged policy
What factors affect cost of Pvt Med Insu?
Location - higher cost in London
Type of hosp
Std of accommodation
Sometimes cover is limited either by amount of benefits in financial terms or by range of treatment, acc to premiums paid
Excludes routine optical, routine maternity, routine dental, chiropody, treatment for self inflicted (drugs), cosmetic, alternative med
What is Long Term Care Insurance?
*Funds paid to help with care when no longer able to take care of oneself or other family help not avai.
Dep on how one needs help with acti of daily living (ADL) -washing, feeding, dressing, using toilet, prep food etc. More ADL help needed, higher the ben paid
*At home or Care home
How is Long Term Care Insu taxed?
1) If a LTC policy has been taken out and premiums paid in advance out of tax paid income then no tax liability
2) If purchased from an annuity (and as Immediate Needs Annuity), tax free if paid directly to carer
3) If not paid from Immediate needs annuity, ie if paid to policy holder, int taxed as savings income at following rates
* rate of 20 pc deducted at source - can be claimed back from non tax payers or indiv not liable to tax on savings income
* higher rate taxpayers have further 20 % liability
* addl rate payers have further 25% liability
Contract of indemnity - what is it?
It means that an indiv shd not be able to benefit from a claim on an insurance and ‘in the event of a claim, insured persons shd be restored to the same financial position they were in immediately before the loss occurred’
To restore as above claims are paid
1. cash/chq/electronic tfr
2. repair - common with motor insu
3. replacement - item replaced…cheaper for insurer as they can negotiate better prices
4. reinstatement - eg restoration of damaged bldg
Why could an insurance claim be subject to ‘averaging’?
When policyholders underestimate the value of the item insured i e when underinsured, either because
- they are unaware of the true value OR
- inflation has increased the amount required OR
- deliberate understating value to keep premiums low,
then upon a claim the payout is proportional to the premium paid
