Improve Finacial Possition Flashcards
Explain to Zophia and Bartek why they should appoint a guardian and what they should consider
Guardians take on the role of parent
Courts decide if not chosen
They should be made aware and willing
Financial provision should be made for guardian
Their age should be a factor in deciding, and it is better to appoint two
Guardians should also make a will
What are the benefits of relying on Barteks DIS
ACT PEN
Additional financial security whilst couple are under protected
Cost effective as no charge to Bartek
Tax free payout (as not benefit in kind)
Pay rises increase benefit
Estate not affected as written into trust
No medical underwriting
What are the disadvantages of Barteks DIS?
CLOSER
Control on amout is out of his hands
-maynot meet his needs
Lost on new employment
Only death no CIC or IPI
-unknown who could be nominated
Salary sacrifice may lower cover
Employer could withdraw the cover
Reduction in hours could lower cover
Benefits of term assurance/FIB protection
Offers a tax-free lump sum/income
Sum can be matched to the required need
Term can be matched to the required need
Can have low cost
Can guarntee premiums
Can be set up under trust where appropriate
Can index to limit the effect of inflation
Provides piece of mind
Simple under writing as in good health
It can not be cancelled by the insurer
Why could FIB be more beneficial than level term assurance?
Pays out income rather than a lump sum
Which can be used over the long-term rather than spent immediately
The sum insured decreases as the protection need falls
Can set sum insured and term to match thier need
Slightly more affordable than level term
Explain to Bartek and Zophia why level term assurance could be better suited for them than FIB
Pays out a lump sum
Which could then be used to provide an income or a lump sum, meaning more flexibility,
The sum assured will not decrease, meaning there is greater protection
Recomend and justify a suitable protection policy that meets the family’s protection need following the death of Bartek or Zophia whilst Kara is not independent
W-FIB for afordability or level term for greater cover
W-Set up on joint life 1st death basis
A-Sum assured to replace lost income with tax-free income/lump sum
-to maintain Kara’s standard of living
T- Term expected till Kara is independent
S
O-indexation
-to keep pace with inflation
-guaranteed premiums
-to maintain afordability
-written into trust
-to ensure speedy payment and no effect on estate
-Waiver of premiums
-To ensure premiums continue if sick
What are the differences between CiC and personal income protection
IP regular income/CiC lump sum
IP pays out if unable to work through sickness/CiC pays out if diagnosed with listed illness
IP may payout multiple claims/CiC only once
IP Decreasing term/CiC level
IP linked to earnings/CiC is not
IP has a deferred period/CiC has a survival period
IP based on own, any or suited ocupation/CiC can have life cover and TPD added
IP individual policy only/CiC can be joint and/or offer children cover
IP greater underwriting
CiC can be set up under trust
Why might an 8ncome protection policy be more suited for Bartek than CIC
Multiple claims/wider cover
Proportionate benefit avialable
Indexation avialable
Choice of defered period
Provides regular income
Own occupation avialable
Housepersons cover available
Benefits of income protection rather than accident, sickness, and unemployment benefit
Cannot be cancelled/Can claim more than once
Can claim for a longer period
Own occupation
Indexation avialable
Proportionate benefit
Guaranteed premiums
Drawbacks of income protection rather than accident, sickness, and unemployment benefit
Usually more expensive
Longer deferment period
Does not cover unemployment
No lumpsum cover/no death cover
Stricter underwriting
What are the key differences between income protection insurance and mortgage payment insurance
IP can pay to retirement
MPPI max payout is 2 years
IP linked to salary
MPPI typically linked to mortgage costs
IP covers accident and illness
MPPI covers accident, illness and unemployment
IP deffered period 4-104 weeks
MPPI 30-180 days
IP may pay out mulitlpie claims
MPPI typically won’t renew after a claim or premium might go up
IP greater underwriting
MPPI limited undewriting
IP expensive
MPPI relatively cheap
How does statutory sick pay work
£116pw up to 28 weeks paid by employer
Not means tested but must be eligible
-an employee
-too sick to work for over 4 days
-wirh sufficient class 1 NICs
Income and NI taxable
May be entitled to universal credit or employment support allowance after 28 weeks
Describe how employment support allowance works
Employees enter 13-week assessment phase after 28 week SSP
Complete a questionnaire and attend an assessment centre
Work capability devides into 2 groups
Support group (unable to work)
Work related activity group
Contribution based (taxable)
Income related (means tested but not taxable) available
Payments stop at state pension age
Recomend and justify a protection policy to provide an income in long term illness for Bartek and Zophia
Income protection insurance
Indivadual policies for both Bartek and Zophia
50-65% of salary
Until retirement
Provides a tax-free income when unable to work due to sickness or accident and cannot be stopped by provider.
Set up on own job basis for maximum cover
Deffered period to cover Employer sickness benefits if any
Or till emergency fund is used up
This will keep costs down
Set to shortest period if no emergency fund or employer benefits avialable
Guaranteed premiums to keep afordable
Waiver of premium to keep premiums active if unable to pay
Indexation to keep up with inflation
This policy will provide peace of mind that Bartek and Zophias standard of living will not drop if unable to work
