Case Study 2 Aim 2

Question 1

Explain current weaknesses in protection arrangements

8 points

Answer 1

Kerry on half pay for 4 months
Kerry has no life cover
Neither have CIC
No info on sick pay for Sam
Term assurance is on Sam’s lfie only and doesnt pay of fmortgage
Death in service stops if he leaves job
Total life cover is insufficient
Limited pension funds

Question 2

State additional info

13 points

Answer 2

Smoker status
Details of mortgage protection
Affordability / Budget
Is this objective a priority
Expected retirement age
Planning on any more children
Age of dependency for children / mortgage term
When is Kerry going back to work
Any inheritance due
Any Nominations
Does Sam have sick pay
Income level needed if one of them was to die
Do they need additional lump sums

Question 3

State Factors to consider
18 points

Answer 3

Current death in service of 255k
Loss of employment means death in service ceases
Return of fund payable on pensions
Death benefit nominations
They have some life cover
Kerry has no existing life cover
Neither have CIC
Neither have income protection
Neither has unemployment cover
Income / Capital Required in event of death
They are in good health
Affordability / Budget
Retirement Date
Emergency fund required
State benefit entitlement
ATR
Nominations
No cover for childcare

Question 4

Recommend protection for childcare costs in future

9 Points

Answer 4

FIB - Tax free income, low cost cover to meet objectives
Joint Life first death
Term to match child’s 18th bday
Sum assured to meet childcare costs
To cover outgoings
Guaranteed premiums. Cost is known.
Include escalation to offset inflation effects
WoP to protect contributions
Simple underwriting to avoid probate
Under trust to avoid probate

Question 5

Recommend and Justify policy to cover mortgage on death / illness

6 points + justify

Answer 5

Decreasing Term or earlier CIC - Pays out tax free lump sum in the event of death / serious illness
Joint Life First Death - Amount needed in the event of death will be the same
Sum assured to cover outstanding mortgage
Term to cover mortgage
Waiver of Premium - maintains policy if disabled / long term illness
Guaranteed premiums - Cost is certain

Question 6

Recommend and Justify policy to cover illness/incapacity

7 points

Answer 6

Income protection to replace income in event
4 week deferred period. Pays out ASAP.
On Own occupation - widest definition
Benefit of 50-60% of earnings
Term to retirement
Guaranteed premiums so cost is known
Indexation to keep pace with inflation