Products

Question 1

What should a pure endowment be used for? 2 examples

Answer 1

Savings
Repayment of loan
Lump sum on retirement

Question 2

What should an endowment assurance be used for?

What about group endowment?

Answer 2

Savings on living, protection for dependants on death

Retirement benefits for staff on living, death in service for staff who die

Question 3

What might a whole of life assurance be used for? Give 2 examples

Answer 3

Long term protection to dependants

Funeral expenses, tax liabilities on death

Question 4

Why is term cheaper than end assurance and WOL?

Answer 4

It won’t provide a benefit in every case (survival)

Question 5

What’s the purpose of a Term assurance? The example is clear.

Answer 5

Provide protection on financial loss of dependants

Question 6

What’s the group version of a term assurance for?

Answer 6

Death in service
Credit card companies against their holders
Anywhere else with a risk that goods won’t be paid for on death
Key person risk

Question 7

2 uses of a decreasing term?

Answer 7

Mortage with capital and interest repayments

Benefits for children on death until can fend for themself

Question 8

Why is there a deferred period on ASU contracts?

Answer 8

Assumption that other resources will pay e.g. company/state

Question 9

Why does a Critical illness pay a lump sum on diagnosis?

Answer 9

Nursing and other care

Question 10

If there’s a CI rider on a WOL assurance, what does it mean?

Answer 10

It pays out the death benefit in advance of death

Question 11

What risk do long term care contracts cover?

Answer 11

Need of home care or nursing home care after retirement

Question 12

How might a long term care contract work (when is the payment, how is it paid)

Answer 12

Pay for all costs for life OR
Cash lump sum OR
Annuity contributing towards cost of care

Question 13

What does indemnity mean?

Answer 13

Insured restored to same financial position after loss as before it (cover the costs)

Question 14

What is liability insurance?

Answer 14

Indemnity where insured is legally liable to pay some compensation to a 3rd party. Legal expenses usually covered.
Illegal act of negligence not covered

Question 15

Give 5 types of liability insurance? An some examples

Answer 15

Public (Marine, Aviation, Property, Motor)
Motor (3rd party, fully comp)
Employers liability
Product liability
Professional indemnity

Question 16

What restrictions may there be on payout amount of liability insurance?

Answer 16

Max indemnity per claim
Max indemnity per event
An excess
Illegal acts not covered
Minimum cover required by legislation

Question 17

Explain employers liability

Answer 17

Indemnify employee or his estate

Death, illness, injury, disease

Question 18

Explaing motor 3rd party

Answer 18

Indemnify car driver again payment to other car driver/estate on death/injury/damage

Question 19

Explain public liability

Answer 19

Indemnitiy against legal liability for death/injury/damage to proprty belonging to another person

Question 20

Explain product liability

Answer 20

Indemnify company against payouts due to death/injury/damage to property of another person caused by product fault

Question 21

What perils might a product liability insurance cover?

Answer 21

Faulty design/manufacture/packaging

Misleading/incorrect instructions

Question 22

What is PII

Answer 22

Indemnify insured against compensation required from negligence in doing a service e.g. poor medical treatment, incorrect financial advice

Question 23

What types of property damage insurance (loss of the property or damage to it) are there?

Answer 23

Residential building
Moveable property e.g. contents of house
Commerical buidling
Land vehicles
Marine craft
Aircraft

Question 24

What does property damage insurance INDEMNIFY against?

Answer 24

Damage or loss to that property

Question 25

What might be covered by marine or aviation cover?

Answer 25

Fire
Explosion
Piracy
Jettison
Perils of the seas!

Question 26

What 3 types of financial loss insurance are there?

Answer 26

Pecuniary loss
Fidelity guarantee
Business interuption (consequential loss)

Question 27

What odes financial loss insurance indemnify against?

Answer 27

Financial losses covered by perils in the policy

Question 28

What migh pecuinary loss be?

Answer 28

Failure of 3rd parties specified in policy to pay debts

Question 29

What might fidelity guarantee be?

Answer 29

Dishonest actions by employees e.g. losses covered by fraud of employees

Question 30

What might business interuption cover be?

Answer 30

Fire at property or neighbouring property

Question 31

What is personal accident insurance for? Why is it not indemntiy?

Answer 31

Loss of limbs or a specified injury.

Not indemnity as can’t quantify value of a limb

Question 32

What is indemnity insurance?

Answer 32

Puts you back in the same position financial as you were before the insured event happened.
Property damange
Theft
Killing someone by mistake in car
Medical treatment
Unemployment

Question 33

If a provider chooses not to match liabilities, what will the key thing be to determine?

Answer 33

How much extra capital will be needed to cover the risk of not being able to meet liabilities when due

Question 34

What cashflows are there on a provider of an immediate annuity?

Answer 34

Lump sum in
Investment returns (interest and capital) from lump sum
Regular payments out on benefits
Regular payments out on expenses
Until death or policyholder

Question 35

When investing the premium for a endowment assurance, how must a company do it?

Answer 35

Make sure the investment can be sold at the maturity date to pay the survival benefit