Knowledge Gaps - Health Insurance Flashcards
Why would an income policy (IP)usually pay out and how frequently?
If someone is too ill to work and regular weekly/ monthly payments
Does an IP policy pay a lump sum or a regular income?
Regular income
What is IP also known as?
Permanent Health Insurance (PHI)
When can an indicidual usually take out an IP policy and when will it end?
Between 18-60, ends around retirement date
What is the deferred period in an IP policy?
The set period before a claim is payable (4, 12, 52 weeks) etc.
In an individual IP policy, how will an individual receive the benefits in the event of a payout?
Insurer pays directly to the insured free of tax
Through an employer scheme, how would an employee receive their benefits for an IP claim?
Benefit is payable to the employer and employee receives the salary net of tax & NICs
What is a rehabilitation benefit and why would a life office provide this for an IP policy?
Reduced levels of earnings when an employee returns to work after being off sick, encourages people to get back to work
What is a proportionate benefit for an IP policy?
Gives the policyholder a reduced monthly benefit, the same to the reduction in their earnings compared to earnings 12 months before incapacity
What are the 3 main cover types for IP policies?
Standard policies
Day one and back to day one policies
Group schemes
What are the characteristics of a standard IP policy?
Pays out after deferred period until retirement
Unlimited claims allowed
Benefit set to specified % of pre-claim income
What is the difference between a day 1 and back to day 1 policy?
Day 1 - begins from first day of illness, pays out weekly instead of monthly
Back to day 1 - Benefit not payable until deferred period, but then it will pay out amount from day 1
Who are day 1 and back to day 1 policy primarily for?
The self employed
Why do group schmes usually have a higher max benefit amount?
ATo cover the extra employer has to pay tax/ NICs on benefit
How is the underwriting of IP different to Life insurance?
Looking at morbidity (chance of getting ill) rather than mortality ( chance of dying)
Name 2 factors which affect the rate of an IP policy?
Age
Health
Smoking
Occupation
Hobies
Length of deferred period
What are the 3 categoeries of cover for IP policies regarding occupation?
Own Occupation (will pay out when can’t fdo own job)
Suited occipation (When can’t do own job or similar job)
Any occupation (can’t do any job)
What types of occupation would fall in to class 4 occupation types, and which would fall in to class 1?
Class 4 - manual jobs
Class 1 - professional services, clerical/ managerial
What can happen if someone changes their job, doesn;t notify the insurance co then tries to claim?
Insurer can decline, or reduce amount
What is the difference between a renewable and reviewable IP policy?
Reviewable - reviews premiums periodically in light with claims
Renewable - initial 5 year policy, can automatically renew at end of term but premiums may rise to reflect new age
In relaion to income protection, what is the definition of incapacity?
When a person is unable to work due to illness/ injury
If an insurance co doesn’t expect someon to recover from their incapacity, how will they pay the policyholder?
A commuted lump sum
What type of payment would a Critical Illness cover policy pay out in the event of a claim?
A tax free lump sum
When would a ciritical illness claim pay out?
When someone becomes critically ill and it’s a condition listed on their policy
What is severity based cover for a CIC policy?
When additional payments have to be made beyond a particular stage of the illness
What are the feautres of a standalone CIC policy?
No life cover and can be guaranteed/ reviewable
Some pay regularly instead of lump sum as can be cheaper policies
When would a CIC policy combined with life assurance pay out?
The earliest of death or diagnosis of a critical illness
With a reviewable CIC policy, what are the reviewed rates based on?
general advances in medical science, not individual health
In an index linked CIC policy, how will the sum assured rise each year?
a set % or in line w inflation
What is a waiver of premium feature of health insurance policies?
When premiums aren’t payable until a claim is made
For children’s cover CIC policies, when will they pay out?
If the child meets the survival period
What is a life cover buy back CIC policy?
Can offer life cover without medical underwriting, 2 years after making a CIC claim
For CIC policies will the underwriter look at mortality risk or morbidity risk?
Morbidity
What is the survival period in relation to CIC policies?
When the lump sum is paid out in CIC policies if insured has survived relevant time period (14 days etc)
For CIC claims, who is the onus on to prove the claim?
The policyholder
What is the difference between acute and chronic conditions?
Acute - rapid onset with a quick treament period
Chronic - long lasting and incurable
Are CIC policies subject to tax?
No
What type of trust is most suitable for a life assurance contract with critical illness contract?
A split trust
When will personal Accisent and sickness insurance pay out and how will it pay out?
If someone suffers a serious accindent/ injury.
Paid out in a tax free lump sum
Do private medical insurance policies provide cover for acute or chronic illnesses?
Acute
For PMI cover what is covered in comprehensive plans compared to mid-range plans?
- home nursing & private ambulances
- parent staying with a child in the hospital
- policies for whole family
What type of underwring accepts a PMI contract without medical information needed?
Moratorium underwriting
What are the advantages of group cover PMI plans as opposed to individual cover plans?
Group premiums can be lower
Reduced needs for underwriting as underwriting large group
When a claim is made by the insurer to the hospital in a PMI claim, is the payment subject to tax?
No
What is Accident, Sickness & unemployment insurance often referred as?
Short term IP
When could someone receive a lump sum for an ASU claim?
Loss of sight/ a limb
How often are benefits payable under an ASU claim and for how long?
Monthly/ weekly benefit
Benefit payable for 1-2 years
Why are group ASU schemes usually popular with employees?
Preferential premiums/ underwriting on group basis
Benefits paid to individual aren’t taxable
What are the two different categories of LTC insurance?
1) Immediate care needs annuities
2) Pre funded care plans
What is the difference between an immediate care needs annuity and a pre-funded care plan?
immediate care needs annuity is guaranteed and bought at time of need for LTC, pre-funded is a policy taken out to insure need for LTC before it is needed
Which activities determine whether an individual is eligible for LTC insurance?
Activities of Daily Living (ADLs)
What are two of the activities of Daily living required to take out LTC insurance?
Functional Mobility
Bathing & showeing
Dressing
Self feeding
Personal hygeine & grooming
Toilet hygeine
