Products Flashcards
What should a pure endowment be used for? 2 examples
Savings
Repayment of loan
Lump sum on retirement
What should an endowment assurance be used for?
What about group endowment?
Savings on living, protection for dependants on death
Retirement benefits for staff on living, death in service for staff who die
What might a whole of life assurance be used for? Give 2 examples
Long term protection to dependants
Funeral expenses, tax liabilities on death
Why is term cheaper than end assurance and WOL?
It won’t provide a benefit in every case (survival)
What’s the purpose of a Term assurance? The example is clear.
Provide protection on financial loss of dependants
What’s the group version of a term assurance for?
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
2 uses of a decreasing term?
Mortage with capital and interest repayments
Benefits for children on death until can fend for themself
Why is there a deferred period on ASU contracts?
Assumption that other resources will pay e.g. company/state
Why does a Critical illness pay a lump sum on diagnosis?
Nursing and other care
If there’s a CI rider on a WOL assurance, what does it mean?
It pays out the death benefit in advance of death
What risk do long term care contracts cover?
Need of home care or nursing home care after retirement
How might a long term care contract work (when is the payment, how is it paid)
Pay for all costs for life OR
Cash lump sum OR
Annuity contributing towards cost of care
What does indemnity mean?
Insured restored to same financial position after loss as before it (cover the costs)
What is liability insurance?
Indemnity where insured is legally liable to pay some compensation to a 3rd party. Legal expenses usually covered.
Illegal act of negligence not covered
Give 5 types of liability insurance? An some examples
Public (Marine, Aviation, Property, Motor) Motor (3rd party, fully comp) Employers liability Product liability Professional indemnity
What restrictions may there be on payout amount of liability insurance?
Max indemnity per claim Max indemnity per event An excess Illegal acts not covered Minimum cover required by legislation
Explain employers liability
Indemnify employee or his estate
Death, illness, injury, disease
Explaing motor 3rd party
Indemnify car driver again payment to other car driver/estate on death/injury/damage
Explain public liability
Indemnitiy against legal liability for death/injury/damage to proprty belonging to another person
Explain product liability
Indemnify company against payouts due to death/injury/damage to property of another person caused by product fault
What perils might a product liability insurance cover?
Faulty design/manufacture/packaging
Misleading/incorrect instructions
What is PII
Indemnify insured against compensation required from negligence in doing a service e.g. poor medical treatment, incorrect financial advice
What types of property damage insurance (loss of the property or damage to it) are there?
Residential building Moveable property e.g. contents of house Commerical buidling Land vehicles Marine craft Aircraft
What does property damage insurance INDEMNIFY against?
Damage or loss to that property
What might be covered by marine or aviation cover?
Fire Explosion Piracy Jettison Perils of the seas!
What 3 types of financial loss insurance are there?
Pecuniary loss Fidelity guarantee Business interuption (consequential loss)
What odes financial loss insurance indemnify against?
Financial losses covered by perils in the policy
What migh pecuinary loss be?
Failure of 3rd parties specified in policy to pay debts
What might fidelity guarantee be?
Dishonest actions by employees e.g. losses covered by fraud of employees
What might business interuption cover be?
Fire at property or neighbouring property
What is personal accident insurance for? Why is it not indemntiy?
Loss of limbs or a specified injury.
Not indemnity as can’t quantify value of a limb
What is indemnity insurance?
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
If a provider chooses not to match liabilities, what will the key thing be to determine?
How much extra capital will be needed to cover the risk of not being able to meet liabilities when due
What cashflows are there on a provider of an immediate annuity?
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
When investing the premium for a endowment assurance, how must a company do it?
Make sure the investment can be sold at the maturity date to pay the survival benefit
