Financial Advice - Protection Flashcards
Term assurance - Provide, types, options, can it be written in trust?
Tax-free lump sum on death during term (usually include Terminal illness benefit)
Types [Level, increasing, decreasing, renewable, convertible]#
Options [Waiver of premium, can include CIC]
Can be written in trust
Critical illness cover - Provide, types, options, can it be written in trust?
Tax free lump sum upon diagnosis of critical illness against survival period of up to 30 days
Standalone or combined with life assurance
Free children cover
Options - reviewable, guaranteed premiums
Sum assured can be index linked
Waiver of premium
Life cover buy back
Life and earlier CIC policies should use a split benefit trust
Types of Term Assurance
**Level: **Fixed sum assured throughout term
Increasing- Sum assured increases throughout term. Either fixed to CPI/RPI or average weekly earnings
**Decreasing - Sum assured reduces each year in pre-determined way. Used to protect a capital and interest mortgage. Intervivos to cover potential IHT liability on PET - sum assured reduces in line with taper relief.
** Family income benefit - sum assured is an amount paid each month/quarter/year from date of death until end of policy term. May be able to commute regular payments for a lump sum
Renewable - Usually for a 5 year term at outset. At end of term a new 5 year policy can be started without underwriting. Premium will be based on age at renewal
Convertible - Policy can be converted into a whole of life or (in some cases) an endowment without underwriting. Premium for new policy based on age at conversion.
What is income protection
Deferred Period
Payment type
Different benefits
Regular tax-free income when unable to work due to accident/illness
Deferred period (4,13,26,52 or 104 weeks).
Paid until return to work,retire, death or policy ends.
Generally cannot be cancelled once given - insurer has to honour it
Rehabilitation benefit - proportionality reduced benefit to top up earnings when someone returns to work but on a part time basis
Proportionate benefit - Reduced benefit equivalent to reduction in earnings for those who return to work but in a lower paid job.
No limit on claims.
Benefit limited to 50-65% pre-claim income
Own occupation (widest cover)
Guaranteed or reviewable premiums
Automatic waiver of premiums
What is Personal Accident and Sickness insurance (PAS)
Deferred Period
Payment type
Different benefits
Tax-free income if insured has accident or off work due to sickness
Short deferred period (eg 4 weeks - but will only pay for 26,52,104 weeks)
Benefit usually a fixed sum - not related to earnings
Usually a annual contract - but can be shorter and cancelled by insurer unlike Income protection
Standalone, or built onto household, motor or travel insurance
Can also include
Refund of medical expenses
Lump sum payments of loss of limb
What is Accident sickness & Unemployment Insurance
Deferred Period
Payment type
Different benefits
Tax-free income if insured has accident or off work due to sickness or unemployment
Deferred period similiar to MPPI (30-180 days)
Usually annual contract but can be shorter periods - can be cancelled by insurer
Max benefit payment period 2 years
Pre-existing medical conditions excluded
Benefit limited to set % of earnings and or monthly max amounts
Possible lump sum payments for loss of limb, loss of sight
What is Mortgage Payment Protection Insurance (MPPI)
Deferred Period
Payment type
Different benefits
Amount to cover mortgage if insured has accident or off work due to sickness or involuntary unemployment.
Deferred period often 30-180 days.
Benefit usually payable for up to 12,18 or 24 months only.
Must cover self-employed
MPPI cannot be sold at the same time as a mortgage
What is private medical insurance
Covers costs of private treatment e.g. consultant fees, investigations, treatment, accomodation costs
Indemnity policy - can only claim back expenses incurred
For acute conditions (not chronoic conditions that are incurable)
May need to pay excess or co payment
Basic plans usually restricted to accomodation,drugs, dressings and doctor fees
Mid range covers more
Comprehensive covers ebven more
Treated as benefit in kind if premiums paid by employer
State the benefits and drawbacks using income protection policy as opposed to an accident, sickness and unemployment policy
Benefits:
Cannot be cancelled by insurer/ can claim more than once
Can claim for longer period
Own occupation available
Indexation of benefits
Can include proportionate/rehabilitation benefit
Guaranteed premiums
Drawbacks
Usually more expensive
Often longer deferment period before receipt of claim
Does not cover unemployment
No lump sum benefits/no cover upon death
Stricter underwriting
