Life Assurance

Question 1

8 points of flexible whole of life cover (unit linked).

Answer 1

A. Unit linked
B. Sum assured - 3 levels Maximum, balance & minimum.
C. Most go for balanced
D. People pay a premium
E. Over the years you buy more units with the hope of growing value.
F. 10 years guaranteed premium
E. After 10 years and then every 5 years it is reviewed and if the slush fund covers the balance, the premium stays stable
G. Units then eroded away to cover the sum assured.

Question 2

Universal Whole of Life policies - name 3 add ons?

Answer 2

1. Critical ilness covered
2. Can add waiver of premium (if ill)
3. Guaranteed insurability - later on in life they wouldn’t check your health.

Question 3

What is key person insurance

Answer 3

• 1. Commercial insurance policy (think Emiliano Sala).
• 2. If company suffers financially on someones death this can be covered.
• 3. Specialist contract - third party to insure someone elses life.

Question 4

Trusts & Life Assurance - what is the point?

Answer 4

1. Could be a delay in someones death and the benficiary getting the money.
2. Money goes into the estate and inflates the estate - not good for tax reasons.

Question 5

How do you set up a trust?

Answer 5

• Mortgage advisor can advise on this but the donor (person who owns the estate)
• Good for referals as people will benefit (trustees)
• Trustee is nominated as the person to hold onto the money and pass onto the beneficiary - can be different people.
• Should be someone that you trust.
• Can be more than 1 person.

Question 6

What types of trusts are there?

Answer 6

1. Married womens property act trust (very old) - Money went to wife.
2. Absolute trust - when set up, you cant change it.
3. Flexible trusts (rage in the 90s) good but donor always name people to control. Issue with self interest.
   4*. Discretionary trust - used now a days - nobody is mentioned - trustees control the decisions. * used more often now.

Question 7

Which policies should you put into trusts?

A. It is recommended that all types of insurance go into a trust.

B. This is not recommended.

Answer 7

A. It is recommended that all policies go into trusts.

Question 8

What points below are relevant for the
Relevant Life Plan- RLP (assurances)?

1. Term assurance done in a tax efficient way.
2. Done by small companies on behalf of their employees
3. Company is the policy holder.
4. Company takes out as a multiple of their salary

.

Answer 8

All of them.

As soon as someone dies the trustess pay the beneficiaries of the life assurance.

Premiums are paid by the employer.

Great tax benefits for the company.

Question 9

Business Protection Insurance
Describe:

1. Automatic accrual.
2. 2. Buy & Sell.
3. Cross Option.

Answer 9

• Automatic accrual - if 3 partners and one dies the insurance compensates the family of the person who has died.
• Buy and sell - partner 3 dies then his share goes up for sale and the insurance helps partners 1 & 2 buy his share.
• Cross option - There is an option to sell