2. Main Areas of Financial Advice: The Present

Question 1

Critical Illness

Answer 1

Pays a lump sum on diagnosis of a specific illness

Question 2

Structured loans

Answer 2

Fixed interest payable over the full term of loan

Question 3

Unstructured loans

Answer 3

E.g. mortgages - because you can increase payments and repay early

Question 4

What are Whole of life policies

Answer 4

Guaranteed level of cover for the policy holders life

Can be non profit or with profits

Question 5

What is a convertible term insurance

Answer 5

Allows policy holder to convert policy to an endowment policy or a whole of life policy

Question 6

What % of earnings will the insurance company restrict with an income protection policy

Answer 6

50-60% of earnings

Question 7

What is term insurance?

Answer 7

Pays a lump sum on the death of the life insured - no savings/investment element

Can also pay or series of lump sums (family income benefit)

Question 8

What are Endowment policies

Answer 8

Pay out a lump sum on death or if they survive the value of policy at the end of the term

Question 9

What is income protection

Answer 9

Pays out tax free income for individual who is unable to work due to illness or accident after a deferred period

Question 10

What is personal accident and illness insurance

Answer 10

Pays a regular benefit when a policyholder can’t work due to accident or illness

Question 11

What is payment protection insurance

Answer 11

Covers loan payments to those who are redundant and sickness and accidents