Chapter 3

Question 1

What is Protection insurance?

Answer 1

type of insurance contracts that provide financial sums in the event of long-term illness, disability or death.

Question 2

what are the protection needs

Answer 2

• health (provision against illness, incapacity or accident);
• income, mortgage and other debt;
• the event of death;
• asset protection; and
• business protection

Question 3

what state benefit is paid for Unemployment/low earners

Answer 3

Universal credit: paid to individuals who are actively seeking work or are on low
incomes.

Question 4

what state benefit is paid for Sickness

Answer 4

Statutory Sick Pay: paid to employees who pay Class 1 National Insurance
contributions (NICs).

Question 5

what state benefit is paid illness

Answer 5

Personal Independence Payment (PIP): payable to individuals under State Pension
age who need help with key activities necessary to everyday living (e.g. mobility,
using the toilet, preparing food). PIP is not means-tested.

Question 6

what state benefit is paid illness/loss of
capacity

Answer 6

Attendance Allowance: payable to individuals over State Pension age who need
help with their personal care (often replaces PIP which ends at State Pension age). It
is also not means-tested.

Question 7

what state benefit is paid for Raising a family

Answer 7

Child benefit: paid to parents or to a person responsible for a child under the
age of 16.

Question 8

what state benefit is paid for Caring for others

Answer 8

Carer’s Allowance: a taxable weekly benefit payable to individuals who spend at
least 35 hours a week caring for an individual in receipt of PIP or Attendance
Allowance.

Question 9

what state benefit is paid for Death

Answer 9

Bereavement Support Payment: a lump sum and a series of temporary monthly
income payments paid on the death of a spouse or civil partner and is based on age,
NICs and the nature of the death.

Question 10

Which benefit is available to people over the State Pension age who need help with their personal care?

Answer 10

Attendance Allowance.

Question 11

How does Absolute / bare trusts work

Answer 11

An absolute or bare trust is one where a defined beneficiary is absolutely entitled to the
assets of the trust.

Question 12

what is a term insurance policy that may be used as an alternative to a whole of life policy

Answer 12

term 100 / permanent insurance policy.

Question 13

premiums paid monthly to a life assurance policy will mean they a

Answer 13

frequency loading

Question 14

CIC Standalone policies

Answer 14

These have no life cover
can be guaranteed or reviewable
Premiums are higher
Underwriting may be stricter

Question 15

CIC Policies combined
with life assurance

Answer 15

sum assured is payable on death or diagnosis of a critical illness
‘accelerated death payment’ made during life as an alternative, not an addition, to the death sum assured.

Question 16

CIC renewable

Answer 16

reviewed every five or ten years on the rates current at that time
rates are based on general advances in medical science, not on individual
Reviewable premiums are generally up to 50% cheaper than guaranteed ones.

Question 17

Standalone policies pay out on

Answer 17

the diagnosis and survival of a critical illness.

Question 18

Combined policies will pay out on

Answer 18

the first event of death or critical illness

Question 19

Acute vs. chronic conditions

Answer 19

Acute conditions are characterised by their rapid onset. Treatment is normally of a short duration and will often rectify the condition fully or almost fully. Examples are hip
replacements and the removal of an appendix.

• Chronic conditions are long lasting and usually incurable. Examples are asthma,
  some forms or later stages of cancer and diabetes

Question 20

Private medical insurance (PMI) provides cover against

Answer 20

the costs of private medical treatment.

Question 21

How can the insured person claim back ON PMI

Answer 21

The insured person can only claim back for the costs they have actually incurred and often
the insurer will make the payment directly to the health care provider after paying an excess.

Question 22

PMI is for what type of condition - acute or chronic

Answer 22

acute conditions where speedy private treatment will be most effective. It is not for
chronic conditions that are incurable, although the initial diagnosis of a chronic condition is
usually covered.

Question 23

what is not covered with private medical care Basic/budget plans

Answer 23

home nursing & private ambulances

Question 24

Basic/budget plans PMI

Answer 24

• Cheaper cover
• restricted to the costs of accommodation, drugs, dressings and doctors’
  fees
  -does not include outpatient treatments, home nursing and private
  ambulance services
• There may be limits on the cost of treatment covered in any one year.

Question 25

Mid-range plans

Answer 25

• budget and who wish to
  extend the range of cover.
  -There is cover for more items, with longer claim periods and higher limits.
• wider choice of hospitals and outpatient treatment is more likely to be covered
• Psychiatric cover may also be included.

Question 26

Comprehensive plans pmi

Answer 26

• Claim periods are longer, with higher limits and often a wider choice of hospitals.
  -Services such as home nursing and private ambulances are covered.
• covers family
• include alternative medicine, dental treatment, travel abroad
  and cash payments for nights spent as an NHS patient

Question 27

Accident, sickness and unemployment (ASU) insurance - Premiums tend to be lower for ASU than IP, so individuals often take out

Answer 27

Premiums tend to be lower for ASU than IP, so individuals often take out ASU policies for six months to a year to cover a deferred period on an IP policy.