Chapter 2 : Products (2)

Question 1

What is a whole life assurance?

Answer 1

A contract that pays a policyholder on the death of the life insured. No group version

Question 2

Is a surrender available on a whole life assurance?

Answer 2

Yes, reserve increases as term goes on. Much like an endowment

Question 3

Is a surrender available on a term assurance?

Answer 3

No! reserve reduces as term goes on

Question 4

What needs does a whole life assurance meet?

Answer 4

1. Funeral costs
2. Liability settlements
3. Inheritance tax
4. Transfer of wealth to children
5. Long term protection for dependants

Question 5

What are the main risks associated with a whole life assurance?

Answer 5

1. Mortality
2. Investment
3. Withdrawals
4. Expense inflation

Question 6

What is term assurance?

Answer 6

Term assurance provides a benefit on death within a specified term

Question 7

What are the risks associated with a term assurance?

Answer 7

1. Mortality (worse than expected)
2. Withdrawals (selective)
3. Expenses
4. Convertible = anti-selection risk