Protection & Insurance Flashcards
What is mortality risk?
Risk of death or the length of time you are expected to live for.
What is level term assurance?
It has a set term and sum assured. The payment of the sum assured is made if death occurs within the set term.
It is used primarily for family protection and can also be used alongside and interest only mortgage.
What is decreasing term assurance?
It has a set term and the sum assured reduces gradually over time on a pre calculated basis.
Is is used primarily for mortgage protection in conjunction with a capital and interest mortgage where the mortgage balance decreases over time.
What is family income benefit?
It has a set term and pays out a regular income for the remaining term of the policy after death. The sum assured reduces in stages. The longer you survive the less will be paid out.
Used for low cost family protection where the need for protection is at its highest but disposable income and affordability present the biggest challenges.
What is increasing term assurance?
Allows the sum assured to increase regularly without health evidence.
Used for individuals who are concerned about the possible future buying power of the sum assured and want to combat the effects of inflation.
What is Convertible term assurance?
It gives the individual the option to convert the policy into a permanent one without health evidence.
It is suitable for individuals who are concerned about future underwriting decisions. Premiums are likely to increase as the individual will be older when converting.
What is renewable term assurance?
It gives the individual the option to renew the policy at the end of its term for an additional term without health evidence.
This is suitable for individuals concerned about underwriting decisions.
What is endowment assurance?
It is a savings plan which aims to pay a lump sum at the end of a pre-agreed term. It also pays out a death benefit if the assured dies within the term.
What is whole of life assurance?
They provide a pre agreed sum assured with no end date. Costs tend to be higher for the same level of cover and you often have to pay higher premiums.
They are often used to pay for funeral expenses and inheritance tax planning.
What is critical illness cover most commonly included in?
Term assurance and whole of life policies.
What is income protection insurance?
Also known as (IP)
This replaces income if the individual is unable to work after a specified time.
They are also referred to as permanent health insurance as they cannot be cancelled by an insurer once accepted as long as the required premiums are paid.
What is personal accident and sickness protection?
Also known as (PAS)
A short term and cheaper version of income protection insurance.
These policies can be cancelled by an insurer as they are classed as an annual contract. They are often found as a rider to another type of policy such as travel, building and contents insurance.
What is accident, sickness and unemployment cover?
Also known as (ASU)
Another short term and cheaper version of income protection.
It pays out a regular benefit for 12 or 24 months typically. These policies can be cancelled by an insurer.
What is critical illness cover?
Also known as (CIC)
It pays a pre determined lump sum on the diagnosis of a specified serious/critical illness, permanent disability or terminal illness.
There is a survival period of between 14 and 30 days. It is often added to whole of life policies but can also be taken out as a stand alone policy.
What is private medical insurance?
Also known as (PMI)
This gives people the option of private medical attention.
