Chp 5-9 Flashcards
1) The benefit providers, their roles, and their objectives
a) State
b) Employers
c) Individuals
d) Financial institutions
e) Other organisations
1) The benefit providers, their roles, and their objectives
a) State
i) Direct provision, encouragement of provision, regulation of provision from other providers
ii) Provide benefits to population, education about necessity of providing for benefits, regulate to encourage or compel benefit provision, regulate bodies providing benefits
1) The benefit providers, their roles, and their objectives
b) Employers
i) Orderly financing of benefits for their employees, educating employees, encouraging and/or compelling benefit provision, provide facility for provision of benefits – i.e. scheme
ii) Financing may results from: compulsion/encouragement from state, paternalistic desire to look after employees, desire to attract and retain good quality employees, pooling of expertise and expenses
iii) Flexible benefits –additional salary, additional holiday, additional pension benefits, enhanced death in service benefits, long-term sickness benefits
5) Customer needs (individual and group) met by major life insurance contracts
a) Pure endowment – lump sum on retirement, means of repaying loan
b) Endowment assurance – risk + savings element, group version for employees’ retirement + death in service
c) Whole life assurance – funeral expenses, inheritance tax / death duties
d) Term assurance – cost is cheaper, benefit to dependants on death of employee, balance outstanding on credit card
e) Decreasing term assurance – repaying balance outstanding under a loan, provide income for children until latter can fend for themselves
f) Convertible / renewable term assurance – group version to convert to individual arrangement on leaving the scheme
g) Immediate annuities – retirement, children education fees
h) Deferred annuities – building up pension
i) Long term sickness insurance – in periods of incapacity, group version provide sick-pay scheme
j) Critical illness contracts – lump sum on diagnosis, accelerated death benefit, group version available
k) Long term care contracts – home or nursing home care, group version available also to spouse and parents
6) Types of cover provided by four types of GI contract and descriptions of cover including major perils
a) Liability insurance
i) Employer’s liability – legal liability to compensate employee or their estate for accidental bodily injury, disease, or death suffered
ii) Motor third party liability – indemnifies owner of motor vehicle against compensation payable to third party for death, injury, damage to their property
iii) Public liability – indemnifies insured against legal liability for death, injury against third party, damage to property of third party
iv) Product liability – indemnifies insured against legal liability for death, injury to third party or for damage to property of third party resulting from a product fault (faulty design, faulty manufacture, faulty packaging, incorrect / misleading instructions
v) Professional indemnity – insured indemnified against legal liability resulting from negligence in provision of service – e.g. incorrect advice from actuary, unsatisfactory medical treatment
6) Types of cover provided by four types of GI contract and descriptions of cover including major perils
b) Property damage insurance
i) Residential building, moveable property, commercial building, land vehicles, marine craft, aircraft
ii) Perils: perils of seas, fire, explosion, jettison, piracy, earthquake, lightning
6) Types of cover provided by four types of GI contract and descriptions of cover including major perils
c) Financial loss insurance
i) Pecuniary loss – mortgage indemnity guarantee insurance, protection against bad debts or other failure of third party
ii) Fidelity guarantee – cover against financial losses caused by fraud or embezzlement
iii) Business interruption cover – indemnification against not being able to conduct business
6) Types of cover provided by four types of GI contract and descriptions of cover including major perils
d) Fixed benefits
i) Personal accident insurance – fixed amounts and hence not indemnity insurance
ii) Health insurance – money for medical treatment, can be indemnity or fixed amounts
iii) Hospital plans – lump sum on in-patient treatment
iv) Unemployment insurance – income stream usually of no more than a year’s duration upon being made redundant
7) Descriptions of cashflows on simple products
a) From whose perspective are you looking at the cashflows – provider or policyholder?
b) Main cashflows – e.g. premiums, benefits, expenses, investment income
c) Is each cashflow:
i) Positive or negative
ii) Lump sum or annuity
iii) Level, increasing, or decreasing
iv) Uncertain/certain in timing, amount, and term?
