Chapter 9

Question 1

What are the 2 main types of short term insurance policies? What types of policies fall under these groups

Answer 1

Sickness, accident and unemployment - personal accident and sickness, accident sickness and unemployment, mortgage payment protection insurance, payment protection insurance
Medical treatment - private medical insurance, health cash plans, dental plans

Question 2

What is the difference between IPI and ClC when compared to shorter term insurance policies in terms of renewability?

Answer 2

Shorter term policies are usually annually reviewable by the insurer whereas policies such as IPI are permanent contracts which cannot be cancelled as long as premiums are paid

Question 3

What kind of individuals is PAS aimed at?

Answer 3

Individuals who want to protect themselves against certain types of one-off event, which are not usually covered under other policies
This can include limb and eye loss for example

Question 4

Is PAS cover fixed?

Answer 4

Yes, fixed rather than related to earnings

Question 5

What are the 3 ways PAS benefits can be paid?

Answer 5

Weekly sickness benefit
Lump sum payment
Covering medical expenses

Question 6

Describe the features of PAS as a weekly benefit

Answer 6

Pays usually a fixed amount eg £250 weekly
Short deferred period of 4 weeks
Maximum payment period - benefit could stop after 25,52 or 104 weeks
Max 2 years

Question 7

Describe the features of PAS as a lump sum payment

Answer 7

Paid in cases such as limb loss, death and permanent disablement
Lump sum varies according to event suffered
Laid out in policy document how much paid as well as definitions of each event

Question 8

What events are excluded from PAS coverage? Name 3

Answer 8

Accidents under the influence
Self inflicted injuries
Pre existing conditions
Hazardous activities
Complications from preganancy

Question 9

Is PAS taxed?

Answer 9

Individual - no taxation applied to premiums or proceeds, although premiums paid with income that is already taxed
Employer - likely to be able to offset premiums paid as a business expenses against income or corporation tax
Premiums treated as a benefit in kind for employees
Taxable value added to individuals income tax
Benefits paid tax free still

Question 10

What is accident, sickness and unemployment cover?

Answer 10

Short term form of income protection
Pays an income to an individual if they are sick, disabled or made redundant from employment
Either accident and sickness or all 3 element can be included