6. Life Insurance Flashcards
1
Q
Features
A
- Long term
- Typically one claim
- Claim amount may be known with certainty
- Used for protection against death/ill health and for savings
- Group/individual basis
2
Q
Investment types
A
- W/o profit
- W profit
- Unit-linked
- Index-linked
3
Q
Types
A
- Pure endowment
- Endowment assurance
- Whole life
- Term assurance
- Convertible/renewable term assurance
- Immediate annuity
- Deferred annuity
- Income drawdown
- Investment bonds
- Key person cover
4
Q
Pure endowment
A
- Benefit payable at the known date on survival
- Operates as savings vehicle
5
Q
Endowment assurance
A
- Benefit payable prior to known date on death or at known date on survival
- Offers protection for dependents
6
Q
Whole life
A
- Benefit payable on death of a life
- Not sold to groups
7
Q
Term assurance
A
- Benefit payable prior to known date on death
No benefit on withdrawal:
- Selective withdrawals
- Low premiums and reserves = no scope for worthwhile surrender value
8
Q
Convertible/renewable term assurance
A
Can convert to a permanent form of contract or renew original contract for a further period, all without further underwriting (unless the benefit level is increased)
9
Q
Immediate annuity
A
Single premium payment purchases the annuity and annuity begins immediately afterwards
10
Q
Deferred annuity
A
- There’s a period of time between purchase date and when income stream is required to start
- Can be paid for either by a single premium or by regular premiums during the deferred period
11
Q
Income drawdown
A
- Policyholder can withdraw amounts from the fund as income. The amount withdrawn is at their discretion.
12
Q
Investment bonds
A
Single premium contracts, normally whole life, designed to enable policyholders to invest for medium to long term.
• Can make withdrawals: can be penalties and restrictions on the frequency.
13
Q
Key person cover
A
- Life and/or critical illness policy taken out to cover the life of a key person in a business.
