Health & General Insurance

Question 1

What are the charectersitics of Income protection insurance (IPI) - select all that apply.

1. Based around illness.
2. Covers 4 occupations *clerical *hairdresser *physical work farmer *Labourer.
3. Premiums set at outset and reviewed.
4. Deferred periods - time stated to wait for payment. Longer the period the cheaper the payment.
5. % income protection 50-60% typically
6. Tax free.
7. Paid until retirement
8. Individual plans

Answer 1

All of the above

Question 2

What is critical illness policy

Answer 2

1. Paid in a lump sum.
2. Term plan 20- 25 years.
3. Great for mortgage payment.
4. Can use money to adapt house or car etc

Question 3

General Insurance - overview
What are the risks, name 3

Answer 3

• Renewed annually.
• House.
• Valuables.
• Neglegence - if you dont give the right advice.
• Business risks
• Business interuption insurance

Question 4

4 phrases for general insurance.

1. Indemnity.
2. Double insurance.
3. Average clause.
4. Excess.

What do they mean

Answer 4

1. Indemnity - tv stolen (new tv or money to cover).
2. Double insurance - More than 1 policy on same risk - dont get double the claim (insurance companies share the cost).
3. Average clause - will affect buildings and contents insurance. If under insured insurance company wil average it out. Dont under insure yourself.
4. Excess - If you have a claim you pay the first small amount

Question 5

What is business Interuption Insurance.
Name the 5 types

Answer 5

• Paid out if there is interuption in a business i.e Covid.

1. Property insurance - fire, flood etc
2. Liability loss - employer or professional indemnity (if giving advice and neglegent then people can claim against you).
3. Personal loss - people loss (key man or key person insurance)
4. Pecuniary loss - Customers or creditors defaulting
5. Business interuption - floods/ covid/ cyber attacks

Question 6

Mortgage payment protection (PPI) or ASU
What does it do?

Answer 6

• Pays mortgage payment +25%
• Covers sick, accident and redundancy
• 18-64 year olds
• Need to wait 90 days before you take it out
• Not expensive
• typically will pay 1-2 years
• Its a general insurance (GI)

Asu - Better for self employed

Question 7

What is better ASU or IPI

Answer 7

Both tax free

ASU - covers payments
covers up to 2 years
Standard deferred period (how long until payment)
Covers redundancy
General insurance

PPI - covers all payments
IPI covers your income
Covers until you retire
Can tayor the deferred period
Covers illness

Question 8

Long term care plan - what is it?

Answer 8

People save into long term care plan.
Claim on the policy to fund their care.
More income than £23,250 - must pay for care home .
PAys out when you cant
Wash
Clean
Feed
Toilet
Moving around the house

If you cant do any 3 of the above the plan will pay out.

Lump sum pays out - you buy an annuity and that pays you monthly

(immediate care annuity) This the goes straight to care home - tax free.

Purcahsed annuity - some of this is taxed (interest taxable). Capital part is non taxed.