Life Assurance

Question 1

Term policy

Answer 1

• Pays out if the insured person dies before an agreed date
  eg. If I have a term policy it only pays out if I die within the term eg. 20 years
• Pays my next of kin
• Cheapest type of policy
• Gotten to protect young families

Question 2

Whole life policy

Answer 2

• Pays out and agreed sum of money whenever they insured person dies
• Money is payed out to insured persons next of kin
• More expensive premium because the insurance company will definitely have to pay out

Question 3

Endowment policy

Answer 3

• Most expensive premium
• Pays out the money at a certain date, in the future to the insured person or it pays out to the next of kin if the insured person dies before the agreed date
• Endowment policies can also be ‘cashed in’ by the insured person before the agreed date for a lower amount known as ‘surrender value’

Question 4

Name the 3 types of life assurance?

Answer 4

1. Term policy
2. Whole life policy
3. Endowment policy

Question 5

Loading

Answer 5

Higher risk - Higher premium

Question 6

Discount

Answer 6

Lower risk-lower premium

Question 7

Average clause

Answer 7

If item covered for a fraction, that fraction of claim is paid