Case Study 2 Exam Questions Flashcards
State the additional information you would require in order to advise Sanjeev and Maya on the purchase of their new home.
When will Sanjeev’s training period end?
Do they have any debt and would they like to pay that off before
taking out mortgage?
Confirmation target deposit is sufficient required?
Whether it is feasible to have this saved in the next 3 years?
ATR/ capacity for loss in relation to this objective?
Willingness to maximise Lifetime ISAs for tax efficiency?
Willingness to use other assets?
What other house buying costs do they need to budget for?
Parental help?
Affordability?
How much emergency fund do they need first?
What type of mortgage do they intend to take out (repayment or
interest only)?
And over what term?
Willingness to protect mortgage repayments on illness / death?
State the additional information a financial adviser would require in order to advise Sanjeev and Maya on identifying a suitable level of emergency fund.
Current expenditure/planned expenditure/any surplus income?
Estimated costs of buying a property.
Assets earmarked buying a property
National Insurance (NI) records for State Benefits.
Do they have any debts?
Any inheritances due?
Current state of health/any healthcare needs?
Job security/potential for promotion?
Priority of objectives (e.g. protection/retirement)?
State the factors you would take into account when advising Sanjeev and Maya on building up a suitable deposit for their property purchase.
Size of deposit required / loan to value
When required
Tax status
Affordability
Emergency fund required
Existing liabilities
Attitude to risk
Family assistance
Explain to Sanjeev and Maya why they might not have to pay as much Stamp Duty Land Tax on their new home as they are first time buyers and what costs they may need to budget for on top of their deposit.
First time buyer stamp duty land tax relief is available
0% for properties under £425,000 where the property is valued up to
£500,000
£425,000 to £625,000 charged at 5%
Solicitors fees
Search fees
Removals
Furnishing / improving the new home
Explain to Sanjeev and Maya the key features of a Lifetime ISA.
Can be used to save for first home or later life
Must be 18 or over to open, but under 40
Can invest up to £4,000 a year until age 50
Government will add 25% bonus, up to £1,000 per year
£4,000 counts towards £20,000 limit
Cash, Stocks and Shares or both
No contributions or bonus after 50, but interest / investment growth
accrues
Funds can be withdrawn with no penalty to buy first home, age 60 or
over or terminally ill with less than 12 months to live
Withdrawal charge if funds taken out for any other reason
Explain to Sanjeev and Maya the conditions that apply to buying their first home with a Lifetime ISA.
Property must cost £450,000 or less
Bought at least 12 months after open Lifetime ISA
ISA provider will pay funds to solicitor
Must be buying with mortgage
Identify the key benefits for Sanjeev and Maya of using a Lifetime ISA to save for their house deposit.
Income / gains are tax free
Can invest up to £4,000 per annum
Both eligible for bonus as under 50
Wide choice of investment funds / cash
Government bonus of 25% / up to £1,000 per annum
Bonus paid monthly in arrears
Potential for growth
No penalty for access if used to purchase first home
Liquid – can access at any time (although lose government bonus)
If not used for house deposit, can provide pension benefits at age 60
As married, benefit from APS on death of Sanjeev and Maya
(maintains tax efficiency)
Bonus can then be used for deposit when exchange contracts
Identify the potential drawbacks of Sanjeev and Maya using a Lifetime ISA to save for their house deposit.
Limited contribution of £4,000 per annum
Penalty on withdrawal for reason other than house purchase /
retirement
Must hold for one year to obtain bonus
Restricted use
Property price must not exceed £450,000
Charges
Limited number of providers
Additional admin – may need to set up other vehicles as well
State 5 benefits of Sanjeev and Maya taking out a repayment mortgage rather than an interest only mortgage on their new property.
NB While the case study looks like questions are likely to be focused around saving for a deposit and potential use of a Lifetime ISA, we could also be asked about mortgage types and mortgage protection, so we’ve included questions on these too so you’re fully prepared.
Cheaper, pay less interest over term, no cost for investment products
Level of debt / interest rate risk reduces over time
No investment risk / market timing issues/ shortfall risks
Peace of mind
Few interest only mortgages on the market/easier to remortgage
State 5 advantages and 5 disadvantages of Sanjeev and Maya taking out an interest-only mortgage, rather than a repayment mortgage.
Advantages
Potential growth on investments
Reduced outgoings to lender / more disposable income
May repay early
Can access investments if needed
Tax efficient investments available / matches high ATR
Disadvantages
Investment risk / increased total interest costs / interest rate risk
Shortfall risk / no guarantee of repayment
Temptation to withdraw funds
Needs advice / monitoring / fees and charges
Limited choice of lenders / harder to remortgage
State the key differences between a personal income protection insurance policy and a mortgage payment protection insurance policy for Sanjeev and Maya.
IP can pay an income up to retirement, MPPI maximum pay-out typically 2 years
IP benefit linked to salary, MPPI typically linked to mortgage costs (although may be linked to salary or a fixed amount)
IP covers accident and sickness, MPPI covers accident, sickness and unemployment
IP deferred period 4 – 104 weeks, MPPI 30 – 180 days
IP may pay out multiple claims, MPPI typically won’t renew after a
claim, or, if it does, premium may be very expensive
IP greater underwriting, MPPI limited underwriting
IP expensive, MPPI relatively cheap
Recommend and justify the actions you would take in relation to Sanjeev and Maya’s financial aim of buying their new home.
Earmark sufficient funds for emergency fund
Determine exactly when deposit will be required and how much is needed
And any additional costs associated with house purchase
Current cash flow analysis
If affordability allows, maximise Lifetime ISA contributions to £4,000 in this tax year and until desire deposit achieved
Funds invested will benefit from tax-free income
And Government bonus
Boosting amount available for deposit
Cash Lifetime ISA appropriate
To ensure funds are available at the right time and without a loss
Any other available funds into pension for Maya
To benefit from tax relief
And boost income in retirement
Repay debt (if any)
To reduce their costs / increase disposable income
Make them more attractive borrowers to a mortgage lender
Avoid getting into any further debt
To improve their credit score by the time they come to take out their
mortgage
Recommend and justify the actions you would take to arrange for adequate protection to be in place for Sanjeev and Maya’s new mortgage.
Again, the case study does seem focused more on the deposit, but there will be a need for mortgage protection hence covering this off here.
JL1E decreasing term assurance with CIC (if repayment)
JL1E level term assurance with CIC (if interest only)
To protect the mortgage in the event of death / critical illness
In the most cost effective way
Sum assured to match property value
To cover full mortgage
Term to match length of mortgage
To cover full term
Mortgage payment protection insurance
To protect monthly repayments in the event of Sanjeev and Maya
being unable to work through illness
Benefit equal to monthly mortgage repayments
To cover full amount
Term to match length of mortgage
Alternatively, if affordability allows
Income protection insurance
To cover mortgage and household expenses / standard of living
Maximum benefit (50-65% salary)
Paid tax-free
Term to expected retirement / mortgage term
Own occupation
To provide widest cover
Deferred period to match any sickness cover provided by employer
To keep costs down
Indexation
To keep pace with inflation
Guaranteed premiums
To ensure affordability
Permanent cover
Cannot be cancelled by insurer providing premiums are paid
Identify what should be covered in a review relating to Sanjeev and Maya’s financial aim of purchasing their property.
Amount saved
Suitability of savings accounts bearing in mind their objectives
Whether they have stayed out of debt
Whether they can afford mortgage repayments
Whether they can afford mortgage protection
Changes in housing market
Changes in tax/legislation
Identify the factors that should be taken into account at future reviews for the couple’s mortgage protection cover.
Affordability
Current level of mortgage repayments
Changes in need for income / capital
Current interest rates competitive
Redemption penalties
Change in employment status
Change in State benefits
Change in date at which mortgage will be repaid
New products/legislation/tax/economic conditions etc.
What additional information would you require to advise Maya on the affordability of making pension contributions?
Income and expenditure?
Essential and discretionary expenditure?
Willing to carry out cash flow analysis?
Willing to use a Lifetime ISA to benefit from government bonus?
Willing to use a Lifetime ISA and redirect excess savings to meet
protection / retirement needs?
Is Maya willing to opt in to her workplace pension?
And make regular contributions if affordability allows?
Affordability of contributions based on cash flow analysis
Fund choices available under workplace pension?
Capacity for loss?
Pension fund charges?
The extent to which she’d be prepared to rely on their other assets?
Would she nominate Sanjeev as beneficiary of death benefits?
What would she like to happen after first / second death?
Outline to Sanjeev and Maya why it might be difficult for Maya to afford pension contributions based on their current circumstances.
Sanjeev’s salary is significantly lower than it will be when he qualifies
They are saving for a house deposit
£500 each a month is a large sum
May be unexpected costs
Loss of employment/long-term illness/change in family situation/
lack of financial protection
Stated they expect affordability will be an issue
Explain to Maya how she can go about opting in to her employer’s workplace pension scheme and any restrictions that might apply.
She can request to re-join the scheme
The request must be in writing, e.g. letter or an email
The request must signed by the employee submitting it / personally emailed by the employee.
If Maya has previously opted out in the last 12 months, the employer is not required to opt her back in
If she opted out more than 12 months ago, her employer is required to opt her back in
Her employee’s enrolment status will be assessed, based on her age and earnings at the time of their request.
If Maya takes no action, her employer will automatically re-enrol her 3 years after she initially opted out
Comment on the suitability of a workplace pension’s default fund for Maya.
Maya can forget about the pension
Employers and scheme trustees have a regulatory obligation to
ensure their default fund remains appropriate for their scheme
Charge cap applies
Not tailored to Maya’s needs, chosen to meet the needs of the
average scheme member.
If it’s a lifestyle fund, may be designed for annuity purchase rather
than flexible access
Cautious asset allocation
Maya is a high risk ATR
May favour UK rather than global securities
May not invest in alternative asset classes
May not react to market events (aim for smooth return)
Don’t take account of age on joining
Explain to Maya why a multi-asset fund may be suitable for her retirement needs
Provides diversification across all asset classes / geographical spread
Potential for growth / protection against inflation
Correlation of assets controlled
Reduces volatility/risk
Actively managed / professional management
Rebalances regularly
Risk rated to match ATR
Access to specialist investments
Explain to Maya the benefits of making pension contributions to her workplace pension.
Tax relief
PCLS
Tax efficient fund
Potential for growth
Greater income in retirement
Discipline / pound cost averaging
Flexible options in retirement
IHT efficiency
Intended beneficiary can be nominated / flexible death benefits
Fund choice can match ATR
Matching contributions are available
Salary sacrifice may be available
Lower charges
Deducted from salary
Explain to Maya how ‘pound-cost-averaging’ from investing regular contributions could be suitable for her pension arrangements.
Savings discipline
Benefit from volatility – more units are bought in a falling market
Avoids market timing risk, e.g. investing lump sum before a crash
Suitable for long-term investment
Contributions can be flexible in line with income from new business
Enables higher risk funds to be purchased
Average cost of purchase evens out
Identify the key drawbacks for Sanjeev of using a passive equity tracker fund within his pension.
Pros
Adds diversification to his overall portfolio Potential for growth / inflation protection May be in line with ATR
May be in line with need for growth
No currency risk
No regulatory risk
Should be able to switch easily
With no tax implications as in pension wrapper
Won’t be included in estate on 1st death as pension fund
Can be kept out of 2nd estate if remains within pension wrapper Income and gains tax-free as in pension wrapper
Pension fund so fully protected in event of default
Cons
Not actively managed
No opportunity to outperform index
Will perform poorly in falling market
Tracking error
Will underperform index after charges Lacks diversification of asset classes Single geographic sector risk
Miss out on actual dividend yield
No access prior to age 57
Identify the main factors you would discuss with Sanjeev and Maya if your task was to establish and agree their risk profiles.
Need to understand their capacity for loss/how much of a loss they could bear without jeopardising their objectives/lifestyle
Other income/capital available
Timescale of investment
Appetite for risk/how much loss the couple is prepared to take
How much of their capital are they prepared to put at risk/how much
to keep in a secure area
Assess the above separately for different objectives, and for each of
them
Ensure both understand the risk characteristics of the selected
investments
Discuss volatility/explain investments can rise and fall
Explain that risk is a feature of all asset classes e.g. inflation risk of holding cash, FSCS risk
How much risk the couple need to take/what investment return is required to achieve objectives,
The couple’s previous investment experience/knowledge
Outline the steps you would follow when completing the individual risk profiling assessments for Sanjeev and Maya.
Explained the purpose of the risk profiling tool to Sanjeev and Maya
Completed a risk questionnaire/series of questions including Sanjeev
and Maya’s capacity for loss
Used computer software/manually/to produce a risk-
rating/score/results
Risk rating suggests a suitable asset allocation/an efficient frontier
model
Discussed the results with Sanjeev and Maya and agreed a suitable
risk profile for each of them
State five benefits and five drawbacks of using a risk-profiling tool to assess Sanjeev and Maya’s individual ATRs.
Benefits:
Simple/understandable/consistent/repeatable process/objective
Helps Sanjeev and Maya to understand/consider risk
Separate risk profile for each client/objective established/attitude to
risk can change over time
Assists with appropriate asset allocation
Identifies the maximum loss tolerance/risk and reward
Drawbacks:
Sanjeev and Maya may not understand the terminology/questions
Adviser may misinterpret the results/different tools give different
results
May not establish capacity for loss
Different objectives/clients may have different attitude to risk/may not
consider timeframe
May not take into consideration their investment
experience/behavioural finance/emotion
Cannot be used in isolation/further discussion needed
It does not consider taxation issues or charges
Based on historic data
Only relevant for that particular moment
Identify and explain in detail the key client-specific factors that you’d take into account when assessing Sanjeev and Maya’s capacity for loss.
As a couple they have an adequate emergency fund, though not much excess wealth
Affordability is an issue at present
They are saving for a deposit
At the expense of Maya’s pension contributions
They are expecting an increase in Sanjeev’s income
But we do not know when
They can tolerate some loss / volatility in their investments in the
longer term
They have many years to go before retirement
There is no mortgage as yet and no apparent debt
They are reliant on their earnings for income
No employer sick pay
They do not have income protection
Only Sanjeev has DIS
Neither has CIC
Neither has PMI
No information on their health, but both working so assume OK
They are married and have a will
They have no children / are not planning on having children in the
foreseeable future
Identify the benefits and drawbacks of using each of the following to help the couple retire:
Option 1 – Pension plans
Option 2 – A portfolio of collectives
Option 3 – A portfolio of ISAs
Option 4 – Lifetime ISA
Option 1 - Pension
Benefits
Tax relief at highest rate on own contributions
Matching contributions may be available from employer
If salary sacrifice is available, save income tax and NICs
Fund grows in tax-free environment, 25% taken as PCLS
Contributions can reduce income tax payable
Access to professional fund management
Remaining 75% taxable withdrawals gives opportunity to use
personal allowance
And creates ‘income’ for ‘normal expenditure exemption’ under IHT
mitigation
Drawbacks
No access to benefits until 57
75% taxable as earned income
Annuity would not match ATR
FAD / UFPLS fund remains exposed to stock market
Annual allowance charge effectively limits tax relief on contributions
Option 2 – Collectives
Benefits
CGT AEA of £6,000 (2023/24) available
Can switch to ISA over time/ move lump sums into pensions
No limits on contributions / withdrawals / access
Professional fund management / diversification
Use dividend / personal savings allowances
Drawbacks
No tax relief on contributions
Possible CGT liability
CGT AEA is falling next year
All income is taxable
Dividend allowance is falling next year
Time taken to switch to ISAs / manage tax liabilities
No employer contributions
Option 3 - ISAs
Benefits
Income and capital gains tax-free
Fund grows in tax-free environment
Access to wide range of funds to suit risk / diversify
Professional fund management
No limit on accessing funds
No requirement to report income / gains to HMRC
APS on death of 1st spouse
Drawbacks
£20,000 annual limit on contributions
No employer contributions
May be tempted to access fund pre-retirement leaving a shortfall
Included in estate for IHT purposes
Option 4 – Lifetime ISAs
Benefits
Eligible due to being under 40
25% government bonus (equivalent to basic rate tax relief)
Income and capital gains tax-free
Fund grows in tax-free environment
Access to wide range of funds to suit risk / diversify
Professional fund management
Funds can be accessed penalty free at age 60
No requirement to report income / gains to HMRC
Drawbacks
£4,000 annual limit on contributions
If either become a higher rate tax payer would not receive as much
tax relief as if they were to save into a pension
No employer contributions
25% penalty if access before age 60
Included in estate for IHT purposes
Recommend and justify the recommendation you would make in reviewing the affordability of pension contributions for Maya.
To perform cashflow exercise
To determine surplus income / identify where discretionary
expenditure can be cut back
To use Lifetime ISA to fund deposit required
Freeing up savings to be redirected into Maya’s pension
Maya to write to her employer to request opt-in
So she can contribute and benefit from tax relief
Subject to affordability, Maya to contribute up to 6% of her salary
To benefit from matching contributions from her employer
And tax relief
Maximising the potential for fund growth which will be free of tax on
income and gains
And a larger income for the couple during retirement
Pension assets are also free of IHT
Obtain State pension forecast
To confirm how much she will both receive and from when
Any gaps to be plugged with Class 3 NICs if possible
To maximise the amount of State pension that can be received
State the factors an adviser should take into consideration when reviewing the affordability of Maya’s pension contributions.
Changes in circumstances / objectives / lifestyle / health
Changes in income and expenditure
Investment performance / benchmarking / on track / asset allocation /
rebalance
Change in ATR / capacity for loss
Charges
Use of tax allowances
Tax changes
Pension contributions
ISA contributions
What additional information do you need to help Sanjeev and Maya meet their protection needs?
(NB We covered mortgage protection under Financial Aim 1 so will not repeat that content here. Please refer back if you’d like to review the mortgage protection questions.)
Level of income and/or capital required and for how long?
Do they wish to protect their standard of living in the event of death as well as illness?
Do they wish to protect any future mortgage in the event of death as well as illness?
Would expenditure change at all in the event of death/illness?
Confirmation that the only other protection cover they have is Sanjeev’s DIS
Is the DIS cover under trust?
Has Sanjeev nominated a beneficiary for DIS cover?
Entitlement to State benefits?
Willingness to use pension funds as death benefits?
Has Sanjeev nominated a beneficiary for his pension fund?
Willingness to use other assets, or downsize in future?
ATR and capacity for loss in relation to this objective?
Affordability / budget to be spent in providing solution?
Smoker status / hazardous hobbies that would impact underwriting?
Does their will reflect their current wishes?
Who will look after their estate in the event of second death while
Sanjeev’s nephew is still a minor?
Identify any reasonable assumptions you might make in relation to Sanjeev’s and Maya’s financial protection planning.
That Sanjeev’s firm will continue to provide the same benefits while he is in service / increase his benefits when his pay rises
That company benefits will be lost if he leaves his employer
They would like any debt to be protected against incapacity as well as death
They will remain healthy
Both would continue to work in the event that one or the other were to die or become ill
They are willing to pay for financial protection cover where necessary
If they have children in the future, the children’s dependency will cease when they leave full time education
Their Wills reflect their current wishes
They will make nominations for DIS / pensions as soon as possible if they haven’t done so already
Comment briefly on the couple’s present position and identify any weaknesses relating to financial protection.
If Sanjeev or Maya were to die:
Sanjeev has 2 x DIS of basic salary
His pension would provide a return of fund
No other life cover in place
They are married
Current account and deposit savings account held as joint tenants, survivor would inherit by the right of survivorship
Remainder of estate subject to the Will and left to survivor
No IHT payable on either death at present due to size of estate
No income for either in the event of the other’s death
Bereavement support payment at the lower rate would be available, but this is unlikely to be sufficient
There is no mention of whether Sanjeev has nominated Maya to receive the DIS benefits / death benefits for their pensions
If any lump sums are taken out of the pension environment, they will form part of the survivor’s estate on their subsequent death
If Sanjeev or Maya were unable to work through ill-health:
No employer sick pay
Entitled to statutory sick pay, but that’s around £100 a week and only pays out for 28 weeks maximum
After that, may be entitled to employment support allowance / universal credit
No income protection
We do not know what their outgoings are, so we need to establish this, but it’s probably safe to assume that the couple’s standard of living would be severely impacted in the event of ill-health, as would their ability to repay any mortgage (assuming there is no mortgage payment protection insurance in place)
NoCIC
NoPMI
State the factors a financial adviser should take into account when constructing a financial plan for Sanjeev and Maya’s protection needs.
Sanjeev has 4 x DIS of basic salary, Maya has nothing
Both pensions would provide a return of fund
No mention of death benefit nominations for DIS or pensions
No mortgage as yet, no debts mentioned
No other life cover or CIC
No employer sick pay for Sanjeev or Maya
Neither has income protection
NoPMI
No unemployment cover
The income required on death / illness of either Sanjeev or Maya
Their current good health
Their budget
The term required
Existing savings
Entitlement to state benefits
Married
Wills in place
ATR/capacity for loss
State the benefits and drawbacks of Sanjeev’s DIS cover.
Benefits
No cost to Sanjeev
Not classed as taxable benefit (benefit in kind)
Cover may increase over time as pay rises
Benefits payable outside estate assuming written under trust
No medical underwriting
Benefits paid tax-free
Provides valuable cover where the couple are otherwise under-
protected
Drawbacks
No control over the amount of cover
Cover most likely lost if change employer
Employer could withdraw cover at any time
Proceeds of 1st to die most likely to be in estate of 2nd to die if they
are not spent / placed under trust beforehand
May not be enough to support Maya
Death only – no CIC, limited income protection
If enter salary sacrifice agreement / reduce hours cover may fall
State the benefits of Sanjeev and Maya effecting a term assurance / family income benefit policy to protect their standard of living. (Tweak your answer as appropriate – FIB may be more appropriate given affordability is an issue)
Tax-fee lump sum / ‘income’
Select sum assured to match required standard of living
Term to match needs
Low cost
Guaranteed premium
Can be set up under trust where appropriate
Indexation available
Provides peace of mind
Simple underwriting as both in good health
Cannot be cancelled by insurer
State the key differences between a personal income protection insurance policy and a critical illness insurance policy for Sanjeev and Maya.
IP pays regular income, CIC a lump sum
IP pays out if unable to work through sickness, CIC pays out if
diagnosed with listed illness
IP may pay out multiple claims, CIC only once
Cover decreases over term for IP, constant for CIC
IP linked to earnings, CIC is not
IP has deferred period, CIC survival period
IP based on own/any/suited occupation, CIC can have life cover /
TPD added
IP individual policy, CIC may be joint and/or offer children’s cover
IP greater underwriting
CIC can be set up under trust
State why an income protection insurance policy may be more suitable for Sanjeev and Maya than a critical illness policy.
Multiple claims / wider cover
Proportionate benefit available
Indexation available
Choice of deferred period
Provides a regular income
Own occupation available
Houseperson’s cover available
The couple are considering income protection or an accident, sickness and unemployment (ASU) policy to protect their income in the event of being unable to work. State 5 benefits and 5 drawbacks of using an income protection policy rather than an ASU policy for this purpose.
(NB If question is benefits and drawbacks of ASU compared to income protection you can state the opposite of the points below)
Benefits:
Cannot be cancelled by insurer / can claim more than once
Can claim for a longer period
Own occupation
Indexation of benefits
Proportionate benefit
Guaranteed premiums
Drawbacks:
Usually more expensive
Longer deferment period before receipt of claim
Does not cover unemployment
No lump sum cover / no cover on death
Stricter underwriting
Explain to Sanjeev and Maya how Statutory Sick Pay works.
Pays just around £100 per week if too ill to work
Paid by employer
For up to 28 weeks
Providing they are eligible to receive it (this generally means being an
employee, having paid sufficient Class 1 National Insurance
contributions and have been ill for at least four days in a row)
It is not means tested
It is subject to income tax and National Insurance
After 28 weeks, may then be entitled to Universal Credit or
Employment Support Allowance
Explain to Sanjeev and Maya how Employment Support Allowance works.
Employees enter 13-week assessment phase after 28 weeks (once entitlement to SSP ends)
Complete questionnaire and attend assessment centre – then work capability assessment divides into :
Support group (unable to work)
Work-related activity group
Contribution based (taxable) or income-related (means-tested but not
taxable) versions available
Payments stop at State pension age.
Explain to Sanjeev and Maya how Bereavement Support Payment works and how much the survivor would be entitled to on first.
Payable assuming survivor under State pension age
Lump sum of £2,500 as no children under 20 in full time education
Then maximum of 18 monthly payments of £100
It is neither taxable nor means-tested
Though it is NI dependent (deceased’s record)
Must claim within 3 months of death to be eligible for all payments
Recommend and justify one suitable protection policy for Sanjeev and Maya to provide a regular income in the event of them suffering a long-term illness or disability.
Income protection – one policy each
To cover household expenses / maintain standard of living
Maximum benefit (50-65% salary)
Paid tax-free
Term to expected retirement
Own occupation
To provide widest cover
Deferred period to match emergency fund available
To keep costs down
Indexation
To keep pace with inflation
Guaranteed premiums
To ensure affordability
Permanent cover
Cannot be cancelled by insurer providing premiums are paid
Recommend and justify the actions you would take to provide financial security for the couple in the event of serious ill-health.
Critical illness policy (single or joint)
Sum assured and term to match needs
To pay make any adjustments to lifestyle/house/repay mortgage
Paid tax-free
Indexation
To keep pace with inflation
Guaranteed premiums
To ensure affordability
Waiver of premium
To ensure premiums continue if sick.
Recommend and justify a suitable product that meets the family’s protection need to cover the death of either client.
Level term (or FIB)
JL1D (or 2 SL policies for wider cover)
Sum assured to replace lost income / expected outgoings
To maintain standard of living
Paid tax-free
Term to expected date of retirement
Indexation
To keep pace with inflation
Guaranteed premiums
To ensure affordability
Written in trust
To ensure speedy payment / no impact on estate
Waiver of premium
To ensure premiums continue if sick
Identify the factors that should be taken into account at future reviews for the couple’s protection cover.
Whether they bought a property
If Sanjeev qualifies and his income increases
Changes in need for income / capital
Change in employment status
Change in State benefits
If they have children in the future
