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Cemap 2&3 Self Testing > 18. Types Of Financial Protection ii > Flashcards

18. Types Of Financial Protection ii Flashcards

1
Q

What are rider benefits? What are they used in relation to? (3)

A

Add on features that increase level of cover relating to :
1. Life Assurance
2. CIC
3. IPI

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2
Q

What types of rider benefit are available? (8)

A
  1. Waiver of Premium
  2. Terminal Illness Cover
  3. Guaranteed insurability
  4. Life changes benefit
  5. Replacement benefit
  6. Separation benefit
  7. Accidental death benefit
  8. Total and Permanent Disability benefit
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3
Q

What is Waiver of Premium (WOP)?

A

If you are unable to work, WOP pays your premiums for you so you don’t have to when your income is already at it’s lowest. ensures your policy wont be cancelled

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4
Q

Why might Waiver of Premium appeal to:
1. Self employed people
2. employed people

A
  1. no sick pay, income is quickly affected and might not be able to keep up premiums
  2. sickness benefit is only paid for a limited amount of time, might not be able to pay premiums when this ends
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5
Q

What are the negative things to consider when thinking about taking out waiver of premium? (3)

A
  1. more expensive
  2. If it’s a joint policy, you may only be able to get WOP for 1 person
  3. There is normally a deferred period before WOP kicks in
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6
Q

What is terminal illness cover?

A

Accelerated payment of death benefit - you get pay out when diagnosed with a terminal illness rather than death

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7
Q

What is the minimum life expectancy prognosis for terminal illness to pay out?

A

12 months

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8
Q

What is accidental death benefit?

A

MULTIPLE LOTS OF THE SUM ASSURED will be paid out if death is an accident

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9
Q

What is total and permanent disability benefit?

A

Like, terminal illness cover, pays out death benefit when you are diagnosed with a total and permanent disabilty

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10
Q

What is Guaranteed Insurability?

A

Sum assured can be increased without the need for medical underwriting. The sum assured is allowed to increase either at a set time within the policy, or when a certain life event occurs (with evidence)

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11
Q

What is life changes benefit? What are the life changes? (6)

A

Sum assured increased when one of the following occurs:
1. Divorce/separation
2. Buying first home
3. Moving home
4. Having/adopting a child
5. Child starting higher education
6. Substantial salary increase

Need to provide evidence of this

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12
Q

What is replacement benefit?

A

For JOINT LIFE POLICIES - instead of the policy being cancelled on the death of the first life, the remaining policy holder can start a new policy without further underwriting

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13
Q

What is Separation Benefit?

A

Upon separation, joint life/CIC policy splits into to separate policies, rather than needing to be cancelled

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14
Q

True or false, all uk employers must auto enrol their employees onto a workplace pension scheme?

A

True

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15
Q

Which types of business are more likely to offer group benefits

A

some small businesses

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16
Q

What is death in service benefit?

A

a group scheme which pays out a multiple of someone’s salary to their family if they die whilst being employed

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17
Q

What is a relevant life policy?

A

Like a death in service policy, but more tax efficient for the employer

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18
Q

In what ways do businesses benefit from providing their employees with group benefits? (3)

A
  1. Reduces long term absences
  2. Promotes workplace wellbeing
  3. Premiums are generally an allowable business expense (e.g. can be offset against the tax bill)
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19
Q

What types of cover can employers provide using group schemes? (5)

A
  1. Life assurance - death in service, relevant life
  2. CIC
  3. IPI
  4. ASU
  5. NI & Pension contribution cover
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20
Q

What types of home insurance are there? (4)

A
  1. Buildings
  2. contents
  3. self-build
  4. landlords
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21
Q

What does Buildings insurance cover? (2)

A
  1. The Building
  2. Its FIXTURES
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22
Q

What are the standard perils covered by buildings insurance (9)

A
  1. Fire & Smoke
  2. Lightening/explosion/earthquake
  3. Storm and flood
  4. Subsidence/landslip/heave
  5. Impacts - eg. vehicles, animals, satellites
  6. Theft/attempted theft
  7. Vandalization
  8. Oil escape
  9. Water escape - freezing bursting pipes
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23
Q

Can buildings insurance also cover you against accidental damage?

A

Yes, but usually added premiums for this

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24
Q

What is commonly excluded from Buildings Insurance? (4)

A
  1. Escape of water / oil if the property is UNFURNISHED
  2. Damage to GATES, FENCES & HEDGES
  3. Theft/attempted theft if property is NOT OCCUPIED AND WINDOWS AND DOORS NOT SECURED
  4. Damage to the HEATING SYSTEM caused by RUST/CORROSION.WEAR & TEAR
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25
Q

What is Public Liability Insurance? How much is normally covered? Who does it cover?

A

Covered against legal liability to others. Covers you, your family or the representative of your estate if you die. Usually insured up to £5 milliom

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26
Q

How is the level of cover usually arranged for buildings insurance?

A

Most properties just have a standard level of cover, but you may need more specific sums with older and more unusual properties

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27
Q

What is averaging?

A

For underinsured properties, you get a percentage of the sum assured based on the percentage of the value of the house you insured

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28
Q

What are a lender’s legal rights in relation to Buildings insurance? (4)

A
  1. To insist property is insured CONTINUOUSLY TO THEIR REQUIREMENTS
  2. Have their INTEREST NOTED on the policy
  3. secure a RIGHT OVER ANY PROCEEDS of a claim/insist they are used to repair damage or repay MTG
  4. To be INFORMED IF PREMIUMS ARE NOT PAID before action is taken to cancel the policy - lender might want to pay these themselves and charge it to the MTG loan
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29
Q

What is Self Build insurance?

A

Extra taken out to insure things in self builds that normal buildings ins wouldn’t cover.

30
Q

What is included in self build insurance? (4)

A
  1. Site Insurance
  2. Ten-year structural warranty
  3. Liability Cover
  4. Employer’s Liability Insurance
31
Q

What is Site Insurance? What period of the build does it cover?

A

Covers liability exposure. Starts as soon as the person assured buys the plot, continues throughout planning & building, covering both work and materials

32
Q

What is the Ten Year Structural Warranty?

A

Covers the cost of rebuilding/rectifying work AFTER IT IS COMPLETED due to DESIGN, WORKMANSHIP or MATERIALS

33
Q

What is Liability Cover? What is the usual cover amounts?

A

Covers risk to the PUBLIC AND ANY CONTRACTORS whilst the work is going on

public - around £5 million
contractors - around £10 million

34
Q

What is employer’s liability? is it compulsory?

A

COMPULSORY - protection for project workers against injury

35
Q

What does contents insurance usually cover?

A

Covers theft and damage of moveable objects in the property as well as
1. money stolen from another building via forced entry
2. Locks and key replacement

36
Q

What can normally be added to contents insurance for an additional premium, but is not covered as standard? (4)

A
  1. Accidental damage
  2. Freezer food
  3. Theft/damage of money/credit cards/other possessions if you take possessions with you temporarily out of the home
  4. Contents taken by a family member to uni
37
Q

What is All Risks Cover?

A

Contents insurance - when you are covered for when you take your possessions temporarily out of the home

38
Q

What is covered under Landlord’s buildings insurance? (5)

A

Covers the standard perils of normal buildings, plus
1. Carpets/Flooring
2. Kitchen & bathroom
3. White goods
4. Lights
5. Curtains

39
Q

What optional extras can be included in Landlord’s buildings insurance? (6)

A
  1. Accidental Damage
  2. Terrorism
  3. Legal Protection
  4. Alternative accommodation costs
  5. Rent Guarantee
  6. Liability ins (covers against tenants claiming for loss)
40
Q

What is covered by Landlord’s contents insurance?

A

Furniture in FURNISHED PROPERTYS but does NOT COVER TENANT’S OWN BELONGINGS

41
Q

What is Tenant’s liability insurance? What does it cover against? (2)

A

Cover that tenants themselves can take out to cover them against:
1. damage to landlord’s property
2. Accidental injury to domestic employees

42
Q

What is the main similarity between ASU and IPI?

A

Provides a regular income when someone gets sick or injured

43
Q

What are the main differences between ASU and IPI? (6)

A
  1. Covers REDUNDANCY
  2. CHEAPER Premiums
  3. LIMITED PERIOD FOR PAYOUT (around 1-2 years)
  4. NOT UNDERWRITTEN on a personal basis
  5. NOT PERMANENT - insurer can cancel policy and increase premiums based on their claims experience
  6. Deferred period is usually around 1 month
44
Q

Can self employed people take out an ASU policy?

A

YES, instead of redundancy, they are covered for if they cease trading altogether, but not for periods of unemployment

45
Q

What restrictions are there for ASU in relation to redundancy? (2)

A
  1. Cannot occur within a specified period from the start of the policy
  2. Cannot believe that redundancy was imminent when taking policy out
46
Q

What restrictions are there for ASU in relation to sickness?

A

Cannot come from a pre-existing condition

47
Q

How are benefits of ASU paid out? (3)

A

The lower of:
1. Fixed sum
2. Proportion of salary

  1. This is limited to a maximum benefit payable
48
Q

What is personal Accident Insurance? How are benefits paid?

A

Covers against certain conditions arising as a result of an accident, which can include accidental death. Paid as a lump sum

49
Q

What is Payment Protection Insurance designed to cover?

A

Loan and debt repayments, e.g mortgages, personal loans, overdrafts

50
Q

Can both people in a join mortgage be protected by payment protection insurance?

A

Yes, can be both or just one. premiums are double if two

51
Q

Are the benefits of Payment protection insurance taxable?

A

No

52
Q

Are Payment protection insurance policies permanent?

A

No, reviewed annually and can be cancelled by the insurer

53
Q

Do you have to be employed to qualify for ASU/PPI and MPPI?

A

Yes, continuously for a specified period of time

54
Q

What are the limitations of payment protection insurance relating to injury? (4) Does this differ for self employed people?

A

must not be a result of
1. self inflicted
2. pregnancy
3. substance misuse
4. involvement in crime

SELF EMPLOYED/DIRECTORS OF SMALL BUSINESS - Can only claim for injury if they had no part in running the business when making the claim

55
Q

What are the limitations of payment protection insurance relating to unemployment cover? (4)

A
  1. Have to be continuously employed for specified period

2.Can’t have anticipated redundancy

  1. Redundancy can’t be claimed within minimum period after start date
  2. Has to be redundancy, not sacked or quit.
56
Q

Which of ASU or PPI is likely to be more suited to self employed people?

A

ASU, though IPI could be more suitable again

57
Q

How are premiums calculated for PPI?

A

per £100 of benefit

58
Q

What is the usual deferred period of PPI?

A

30-60 Days

59
Q

What is the maximum length of time PPI is usually paid for?

A

12 or 24 months

60
Q

What does Mortgage Payment Protection insurance cover and for how long?

A

Covers mortgage payments for up to 2 years, in the event of accident or sickness

61
Q

Does MPPI cover against redundancy?

A

It’s an optional ad on

62
Q

True or False, PPI and MPPI are just two different types of ASU that have been marketed differently?

A

True, one marketed for mortgage, the other all debt

63
Q

What are the exclusions and restrictions of MPPI?

A

Same as ASU

64
Q

Does MPPI allow people to claim more than once?

A

Yes

65
Q

What age limitations are there for MPPI?

A

18-65 Years

66
Q

What is the usual deferred period for MPPI?

A

28-30 Days

67
Q

What does MPPI Cover in total? (3)

A

1.Mortgage payments, but for additional cost you can have
2. insurance associated with mtg
3. living expenses

68
Q

Are the benefits of MPPI tax free?

A

Yes

69
Q

Is MPPI medically underwritten?

A

No

70
Q

Is MPPI permanent?

A

No, reviewed annually and can be cancelled

Cemap 2&3 Self Testing (29 decks)

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