Life Assurance Flashcards
Where a claim is made on a term assurance policy the benefits payable are always free of income tax. True or false?
True
Term assurance have no investment element so are paid tax free.
What is the main benefit of a convertible term assurance?
A convertible term assurance allows conversion of some or all of the plan to a different type of plan, at a later date, without the life assured having to provide evidence if their state of health.
Which of the following statements relating to term assurance is correct?
A) a decreasing term assurance will pay benefits only if the insured dies within the policy term.
B) gift inter vivis cover is maintained at the same level for 7 years.
C) a convertible term assurance policy can be converted to an endowment or whole-of-life assurance only within two years of the date if the original policy.
D) if a convertible term assurance policy is converted to an endowment, the maturity date if the new policy must not be more than 5 years later than that of the original policy.
A) a decreasing term assurance will pay benefits only if the insured dies within the policy term.
Which of the following is true of a whole-of-life policy:
A) it is designed to provide protection rather than investment.
B) premiums are always payable throughout the full term of the policy.
C) it can only be used on a with-profits basis.
D) it will pay out only on the death of the insured and can not be surrendered.
A) it is designed to provide protection rather than investment
Duncan and Alice, who are married, are taking out a whole of life plan to provide for payment of inheritance tax liabilities on their deaths. The policy would normally be set up in which of the following ways:
A) two single lives
B) single life
C) joint life - first death
D) joint life - second death
D) joint life - second death
Transfers between husband and wife are free of inheritance tax. Only oayable on the second death.
The main advantage of writing a life assurance policy in trust is to:
A) increase personal allowances
B) ensure the policy obtains qualifying status
C) create a tax-exempt fund
D) ring fence the proceeds outside the individuals estate
D) ring fence the proceeds outside thebindividuals estate
Which type of whole-of-life policy offers a fixed level of life cover at outset that may be increased by the addition of bonuses?
A) with-profits
B) non-profit
C) unit-linked
D) low-cost
A) with-profits
What other type of life insurance is combined with a with-profits plan in a low cost whole of life plan?
A) no -profits
B) decreasing term assurance
C) level term assurance
D) increasing term assurance
B) decreasing term assurance
Low cost whole of life plan combines a with profits plan and a decreasing term assurance plan.
If a policy benefits from a ‘waiver of premium’ what does it mean?
A) no premiums are paid in the first 12 months of a life assurance plan.
B) reduced premiums are paid for the first 12 months of a life assurance plan.
C) no premiums are payable if the life assured is unable to work as a result of accident or sickness.
D) any increase in premium as a result of medical underwriting is added as a debt to the policy.
C) no premiums are payable if the life assured is unable to work as a result of accident or sickness.
Which of the following is INCORRECT in respect of low cost endowment policies?
A) the basic sum assured increases with the addition of bonuses
B) the basic sum assured is lower than the amount borrowed
C) the policy is made up of a with-profits endowment and a decreasing term assurance
D) the policy is guaranteed to repay the mortgage in full at the end of the term
D) the policy is guaranteed to repay the mortgage in full at the end of the term
The policy is not guaranteed to cover the mortgage debt
