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LP2 > Health Protection Products > Flashcards

Health Protection Products Flashcards

1
Q

What length policy type is Income Protection (IP)?

A

Long-term.

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2
Q

How and when is Income Protection (IP) paid?

A

By weekly or monthly benefits when the insured becomes unable to work because of illness or incapacity.

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3
Q

What is another term for Income Protection?

A

Permanent health insurance (PHI).

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4
Q

Between what ages must an individual be to take out Income Protection?

A

18-60

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5
Q

When is the latest date that Income Protection cover would be in place until?

A

The insured’s 70th birthday.

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6
Q

What is the name of the waiting period during a claim before a benefit is payable?

A

The deferred period.

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7
Q

What are the most common deferred periods for IP?

A

4, 13, 26 or 52 weeks.

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8
Q

How are benefits payable for Income Protection in terms of tax?

A

Free of tax on individual policies and as salary, subject to income tax and NICs for group schemes.

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9
Q

What are the names of the TWO benefits in place to encourage claimants to return to work in whatever capacity they are able?

A
  1. Rehabilitation benefit.

2. Proportionate benefit.

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10
Q

What are the THREE main policy types for income protection?

A
  1. Standard policies.
  2. Day one and back to day one cover.
  3. Group schemes.
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11
Q

What percentage of pre-claim income is the benefit usually limited to for a standard income protection policy?

A

50-60%

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12
Q

What percentage of pre-claim income is the benefit usually limited to for income protection group schemes?

A

75%

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13
Q

What is the reason for the underwriting of IP to be very different and more exacting than that of life insurance?

A

Because the chances of being too ill to work are much greater than the chances of dying.

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14
Q

What is moribidity?

A

The probability of sickness.

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15
Q

What are the SIX personal factors an underwriter will look at to determine premiums?

A
  1. Age.
  2. Health.
  3. Smoking
  4. Occupation
  5. Hobbies and pursuits.
  6. Deferred period.
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16
Q

What are the THREE high-level categories of cover that Income Protection is based around?

A
  1. Own occupation
  2. Suited occupation
  3. Any occupation
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17
Q

What is the name of the category of cover for IP that will pay out if the individual is unable to perform their current role/occupation?

A

Own occupation.

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18
Q

What number occupation class are managerial, executive, clerical, administrative and professional workers?

A

Class 1

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19
Q

What number occupation class are shop workers, skilled light manual workers in non-hazardous jobs, hotel and catering workers?

A

Class 2

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20
Q

What number occupation class are skilled workers in non-hazardous manual jobs?

A

Class 3

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21
Q

Skilled workers in hazardous jobs and heavy manual workers?

A

Class 4

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22
Q

Which type of occupation class poses the most risk and therefore will be subject to higher premiums?

A

Class 4

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23
Q

What are the THREE different policy term types in relation to Income Protection?

A
  1. Guaranteed
  2. Reviewable
  3. Renewable
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24
Q

What type of policy term sees that premiums remain constant throughout the life of the contract?

A

Guaranteed.

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25
Q

In relation to Income Protection, what is incapacity defined as?

A

An inability to work due to illness or injury.

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26
Q

Upon making a claim for income protection, why may an insurer ask for evidence of earnings prior to sickness?

A

To make sure that the level of benefit does not exceed the maximum payable benefit.

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27
Q

What are the THREE events that income protection will continue to pay-out until one of which happens?

A
  1. Death.
  2. Return to work.
  3. The end of the policy.
28
Q

Which type of health protection product provides a lump sum on diagnosis of one of a number of specified critical illnesses?

A

Critical Illness Cover (CIC)

29
Q

In some cases, there may be extra amounts of critical illness cover payable if a disease progresses beyond a certain stage, what is this type of policy called?

A

Severity-based cover.

30
Q

What are the THREE main policy types for Critical Illness Cover (CIC)?

A
  1. Standalone policies.
  2. Policies combined with life assurance.
  3. Reviewable policies.
31
Q

When is the sum assured paid on life assurance policies with an element of critical illness cover?

A

On death or diagnosis of a critical illness, whichever occurs first.

32
Q

With what type of term policy can CIC be included into to then be used for mortgage protection?

A

Decreasing term policy.

33
Q

If a life policy includes CIC or terminal illness benefit, what type of trust is it normal practice to use?

A

A split trust.

34
Q

What is the main benefit of using a split trust for a life policy that has CIC or terminal illness benefit included?

A

It separates the life assurance and CIC aspects meaning if the settlor suffers a critical illness they are likely to want the benefits payable to them rather than a third party.

35
Q

What is the name of the feature of insurance policies that stops premiums having to be paid in the event of the policyholder suffering prolonged sickness?

A

Waiver of premium (WOP)

36
Q

What feature of CIC allows for a restricted amount of life cover to be bought 2 years after a claim, without further medical underwriting?

A

Life cover buy-back.

37
Q

What are the FOUR most important factors a CIC underwriter will look at?

A
  1. Age
  2. Lifestyle
  3. Medical history
  4. Family medical history
38
Q

How long is a typical survival period for CIC?

A

14-30 days

39
Q

What type of medical conditions are characterised by their rapid onset, but can often be fully or mostly rectified following treatment?

A

Acute conditions.

40
Q

What type of conditions are usually long-lasting and incurable?

A

Chronic conditions.

41
Q

What THREE things will a life office need to check before processing a claim for CIC?

A
  1. The policy covers the diagnosed illness.
  2. It was not a pre-existing condition.
  3. The policyholder had disclosed everything relevant at the start of the policy.
42
Q

Is the sum assured from Critical Illness Cover subject to income tax or capital gains tax?

43
Q

What type of trust is most suitable for a life insurance contract combined with critical illness cover?

A

A split trust.

44
Q

What type of insurance pays out if the insured suffers a serious accident or injury, or if they suffer a fatal accident?

A

Personal accident and sickness (PAS) insurance.

45
Q

How is personal accident and sickness (PAS) insurance taxed?

A

There is no tax on benefits.

46
Q

What are the TWO main reasons that individuals are more likely to have PAS cover than IP?

A
  1. Personal accident is more widely marketed.

2. Premiums for PAS seem more reasonable.

47
Q

What type of insurance policy may require the policyholder to pay a co-payment?

A

Private Medical Insurance (PMI)

48
Q

What are the THREE main types of private medical insurance (PMI)?

A
  1. Basic/Budget plans
  2. Mid-range plans
  3. Comprehensive plans
49
Q

What are the FOUR possible ways to set up individual PMI as?

A
  1. Single
  2. Joint or married
  3. Single parents
  4. Family
50
Q

What type of underwriting involves excluding pre-existing conditions from PMI cover for a number of years?

A

Moratorium underwriting.

51
Q

How are claim payment for PMI cover taxed?

A

Payments are tax free.

52
Q

What type of insurance is often referred to a short-term Income protection?

A

Accident, sickness and unemployment (ASU) insurance.

53
Q

How is ASU paid?

A

As a weekly or monthly benefit.

54
Q

How are ASU payments taxed?

55
Q

What type of insurance is common in financial plans for individuals who do not have group IP made available to them?

A

Accident, Sickness and Unemployment (ASU) insurance.

56
Q

What type of insurance would an individual take out to cover the deferred period of an Income Protection (IP) policy?

A

Accident, Sickness and Unemployment (ASU) insurance.

57
Q

What are the TWO different policies of long-term care insurance?

A
  1. Immediate care needs annuities.

2. Pre-funded care plans.

58
Q

What type of long-term care insurance policy guarantees future payments towards the cost of nursing or residential home fees for as long as necessary?

A

Immediate care needs annuities.

59
Q

Which of the two types of long-term care insurance policy is no longer available on the market?

A

Pre-funded care plans.

60
Q

An individual’s ability to complete Activities of Daily Living (ADLs) determines an individuals need for what type of insurance?

A

Long-term care insurance.

61
Q

What are the SIX Activities of Daily Living (ADLs)?

A
  1. Functional mobility
  2. Bathing and showering
  3. Dressing
  4. Self-feeding
  5. Personal hygiene and grooming
  6. Toilet hygiene
62
Q

What is the maximum term of Accident, Sickness and Unemployment (ASU) insurance?

A

1 or 2 years

63
Q

What are FOUR additional/other features and options of Critical Illness Cover (CIC)?

A
  1. Waiver of Premiums
  2. Life-cover buy back
  3. Children’s cover
  4. Index linking
64
Q

How often is the premium paid for personal accident insurance?

65
Q

Are the premiums for personal accident insurance fixed or variable?

66
Q

What TWO factors determine the amount of benefit payable for personal accident insurance?

A
  1. The nature of the injury

2. The level of cover

LP2 (6 decks)

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