Chapter 4 - Life Assurance

Question 1

What is the name of the sum assured payable after the diagnosis of an incurable disease that is expected to restrict the life expectancy for 12 months

Answer 1

Terminal illness benefit

Question 2

What are the major loadings to cover the expenses of the life office?

Answer 2

Salaries of employees, commission paid to the sellers of the policies, costs of office, buildings, used, computer, administration, and regulatory costs, medical fees during underwriting 

Question 3

Who was not be able to be a beneficiary under a life policy executed by Robin and subject to the married woman’s property act

Robbins, parents, Robbins daughter aged 14, Robins son aged 21, Robin’s wife

Answer 3

Robbins parents

Question 4

How long after the disappearance of someone with no direct evidence of death, could the spouse of the person applied to the courts for a declaration of presumed death in order to claim on a policy?

Answer 4

7 years

Question 5

What would happen to a life policy if the customer change the gender by gender reassignment surgery

Answer 5

It will remain in force with no amendments required

Question 6

What is the main disadvantage of an absolute trust?

Answer 6

They cannot be adapted to changing needs

Question 7

Why would a relevant life policy be of benefit to someone who has substantial existing pension arrangements?

Answer 7

The benefit payable from a relevant life policy will not count towards there lifetime pension allowance

Question 8

Why might a family income benefit policy be cheaper than a level term insurance for the same initial sum assured

Answer 8

Because of the sum assured under a family income benefit decreases like a decreasing term insurance

Question 9

What would usually be the best type of protection, contract and basis of cover to protect a joint repayment mortgage?

Answer 9

Decreasing Life insurance on a joint life, first death basis

Question 10

What are the four different ways that a policy can be written

Answer 10

Own life, life of another, joint life first death, joint life second death/joint life last survivor

Question 11

What would be the main risk in using death in service benefits as life assurance to repay a mortgage on death

Answer 11

Leaving employment, voluntarily or otherwise could cause the cover to automatically cease

Question 12

What are the types of nondisclosure?

Answer 12

Reasonable-where the customer has acted honestly unreasonably, but I still failed to disclose all facts in which case claim to be paid in full

Careless-where the customer failed to take the reasonable care, and should’ve realised that the information was incorrect, in these cases, proportional amounts will be paid

Deliberate or reckless-where on the balance of probabilities the customer new or must’ve known that information was both incorrect and relevant to the insurer in such cases are you sure I can void the policy

Question 13

What’s the difference between joint tenancy and tenancy in common?

Answer 13

The difference mainly lies in what happens after the death of one of the people involved. Joint tenancy as well upon death. Their interest passes automatically to the survivor.

tenancy in common allows the interest to then be passed to the deceased beneficiaries, instead of the other person involved in the joint ownership

Question 14

If there was a claim on a mortgage to policy, who were the life office pay cash, the mortgagee or the mortgaor

Answer 14

The mortgagee as in the one who took out the policy

Question 15

Why might the cause of death be relevant in a death claim?

Answer 15

Certain activities could be excluded from the cover, or if the death has occurred, even taken part of the short period, then they may require further evidence They may also want to see if it happened abroad or in the UK and suicide can often have a bearing on the validity of the claims.

Question 16

What is a convertible term assurance?

Answer 16

Turn the shower and sort of an option to be converted to in Delmont or whole of life policy without evidence of health at any time before expiry

Question 17

Why are premiums derived from a mortality table loaded

Answer 17

to cover the expenses of the life office in marketing, selling and administering the policy

Question 18

How can the owner of an existing life policy put it in trust?

Answer 18

By assigning it to trustees using a deed of assignment

Question 19

If terminal illness cover is part of a team insurance, when will it not normally apply?

Answer 19

The last 12 or 18 months of the contract

Question 20

What proof of title will be required for death claim on an unassigned own life policy, and to whom will the money be payable

Answer 20

The appropriate grant of administration and the money would be payable to the legal personal representations of the will

Question 21

The cost of the life cover provided by the whole of life unit link policy is typically met by

Answer 21

A variable level of a unit cancellation throughout the life of the policy

Question 22

The natural premiums of a life assurance policy rise each year, due to what

Answer 22

The lives assured grow older

Question 23

What is terminal illness benefit?

Answer 23

Turn on Ellis benefit is known as a rider for additional benefit to a whole of life policy

This does vary from critical illness as it is not available as its own policy, so be wary in questions and properly read to make sure that this is a question about terminal illness or critical illness.

Turn on illness is not paid. In addition to the death benefit, it is just an earlier payment of the song assured

Question 24

If a client has taken out a unit linked whole of life insurance policy on a standard cover basis, what situation would require the premiums to be increased?

Answer 24

If the underlying fund did not meet a predetermined rate of return each year

Question 25

What is normally added to be loaded premium to arrive at the final premium payable for life assurance policy

Answer 25

The policy charge is normally added to a loaded premium to arrive at the final premium payable. The policy charge is a handling fee 

Question 26

What form of assignment is not covered under the assurance act 1867

Answer 26

Assignment by operation of law

Question 27

What will make the claim value vary on a with profits life insurance policy

Answer 27

The precise date of death

Question 28

Most life offices will pay death claims without a grant, where the sum assured, and the value of the estate is small, if the proceeds are being Paid to who

Answer 28

A surviving spouse

Question 29

How is the cover provided under a whole of life policy affected if premiums cease at a preset age

Answer 29

It is not affected the cover continues until death

Question 30

What to policies make up a whole of life, low-cost insurance policy?

Answer 30

This combines a with profit investment base with a decreasing term insurance.

Question 31

How can I consumer compare costs on different whole of life policies?

Answer 31

They use reduction in yield, this shows the annual reduction in any possible investment element due to plan charges. So a lower reduction in yield would assume a lower fee. Regardless of reduction in yield, standard cover will always have a greater chance of providing some investment element than say the likes of a maximum cover policy

Question 32

How long in relation to the duration of the cover will premiums be payable for

Answer 32

Premiums will often be payable first period slightly shorter than the duration of the cover not longer

Question 33

Can you get escalating payments on a family income benefit policy?

Answer 33

Yes, to keep in line with inflation

Question 34

Define the pure or net premium calculated for life insurance policies by actuaries from mortality tables

Answer 34

The pure on net premium calculated for life insurance policies by actuaries from mortality tables. Is the premium required just to meet the claims of those who died during the year.

Question 35

If a life insurance policy is assigned to someone, how soon should the person notify the life office of the assignment?

Answer 35

As soon as possible

Question 36

How are premiums usually calculated by a life office and how would a difference effect this?

Answer 36

Premiums are usually calculated on a yearly basis and assume that the whole premium is available to the life office for investment at the start of the policy year. A premium will include a frequency loading to compensate the life office for not having access to a full payment upfront, if it is to be paid by monthly instalments.

Question 37

Who is the mortgagee and who is the mortgagor

Answer 37

The mortgagee is the lender and the mortgagor is the client

Question 38

What does a continuation option mean in regards to a life insurance policy divided by employer for a pension scheme

Answer 38

This means that the person can take out a new policy if you leave the company based on his age at the time

Question 39

What is guaranteed insurability on in life insurance policy?

Answer 39

It allows the policyholder to increase the sum assured on stated events within a specific time period without the need for further underwriting

Question 40

Why are split trusts useful for life insurance policies, which include critical illness

Answer 40

It’s because the person who is assured we will be able to receive the benefits if diagnosed with critical illness

Question 41

What distinguishes the difference between a mortgage and an absolute assignment

Answer 41

Alright, known as the equity of redemption

Question 42

When a life insurance policies made paid up, what does this mean in relation to the Sum assured?

Answer 42

It is reduced

Question 43

What method is the fastest for collecting underwriting evidence and the results in less nondisclosure?

Answer 43

Tele underwriting