Life Insurance - Administration Flashcards
Insurable Interest, Premiums
Give a summary of insurable interest
A legally recognised & quantifiable financial interest
Who have should have insurable interest in who?
The proposer must have insurable interest in the life assure
Which Act sets out the rules for insurable interest?
The Life Assurance Act 1774
What are the 3 rules regarding insurable interest?
- The proposer must be named in the policy
- The limit of insurable interest sets the limit for the policy sum assured
- No interest, then no insurance
Who have unlimited insurable interest in each other?
Married couples & civil partners
Would an employer have insurable interest in a key employee?
Yes, but this would be limited
Would a beneficiary under a known will have insurable interest?
No because the will could be changed
Would a child have insurable interest in their parent?
No
Does an insurable interest need have to exist throughout the term of the policy?
No, only at the outset
Do insurance companies favour direct debits or standing orders for collecting premiums, and why?
Direct debits because these are variable amounts where the payment can be automatically amended if the premium increases
What do premiums paid by direct debit remove the need for?
Renewal notices
Can lapsed policies be reinstated?
Yes, some insurers allow this
If premiums are missed on a plan that has a surrender value, would it lapse immediately?
No, depending on insurer, one of the following may happen:
~ It will remain in force if the SV exceeds the missed premiums & late payment charge
~ It will remain in force for 1 year, after which the SV becomes payable & the death cover ceases
~ It will be made ‘paid-up’ for the appropriate reduced sum assured
~ It will remain in force with units being cancelled to pay for life cover until there is none left
