Servicing - Chapter 2 Flashcards
Budget
- fact find will have detailed income and outgoing will heel the bus getting assessment to allot you to examine whether a proportion of income might be redirected away
Debt consolation - negotiating a new loan to repay an existing loan with lower interest and repayments
Priority debts - council tax and key bills. Credit cards are classed as lower ones
- debt charities can help
- some companies offer debt consolidation
- involuntary agreements or bankruptcies can happen and are legal arrangements
Home finance
- equity release these are for people over 60 allows them to relapse the quota tied up In their home they have no fixed term and allow them to stay in their home for until they die or move.
Life time mortgage - can choose a lump sum or a drawdown the lump sum is Cheeper as they only pay interest on the amount they want. Life time mortgages offer a no negative equity garuntee.
Home renovation - sells all or part for lump some or regular. They client will usually only get 20-60% of market value of home.
Home purchase plan - these help to but homes without interest for sharia law Muslims
Ljara - payments made towards buying the property are help by the firm and used to but the home at the end of the agreement.
Diminishing musharka - each payment made buying the property buys an extra Alice if the firms share as the clients share increases the firms share gets smaller and the rent paid for use of the firms share
Protection
Criticism influences - existing cover, financial liabilities, dpenersnts, income, age and employment status.
Term assurance - pays a lump sum on the death of the life assured it’s usually the cheapest way to purchase life assurance where the need for cover is likely to last for only a certain length of time
Endowment policies
These pay alimony sun in the death of the life sister but these policies are primarily savings veichles. Some schemes have the option of providing criticism ilness for more costs on the same level as death
Bulk of the premium is directed toward the savings element of the company tract leaving relatively little to provide the cover
Decreasing term assurance
- these policies are designed to meet the needs of individuals with a decreasing l need.
- the sum assured goes down but the premiums do not
Family income benefit payments
This is a type of secreasing term assurance where payments are paid annually or monthly not a sum
Increasing term assurance
The benefit payable increases regulatory over the term if the contract ( for example by 5% per annum) without any evidence that the life assured is still in good health. For the difference the premiums go up and for the increase in value they go up.
Convertible
- this allows the polocyholder to change the term policy into either an ediemenr policy or whole of like policy
Renewable term assurance
Let’s the client effect term ashsjrwbxe policy say there or five hearse at the end of which the client has the garunteee right to effect a similar policy for similar ternejthkut having to give the life office any evidence that they are still in health.
These then mean that the terms will change 40 is cheaper than 43
Whole of life policies
They are primarily geared towards providing a substantial level of life cover but some do have an element of investment. The balance between life cover and investment will depend on the cover. Most policy holders have fixed premiums.
- non profit - the whole of life policy garunteees to pay a fixed amount if life cover on the death of the late. This policy may accumulate a surrender value unlike term assurance but will be very low.
With profit - with profit whole of life contact garunteees to pay a minimum level of life cover on the death of the life assured and this amount increases annually by the addition of extra bonuses. The bonuses ate never garunteeed. A terminal bonus is paid on death which can increase the level of pay out. These pilchard may also accumulate a surrender value which will be higher than a non profit. The surrender value is still unlikely to be substantial in the early years of the policy and for the first two years it is likely to be nil. Premiums for with profit policies are likely to be significantly higher.
Flexible - with flexible whole of life policies the policyholder chi sees between a minimum and maximum level of life cover. The cover selected at tbe lutset can be changed. They are known as unit linked whole of life policies as the premiums but unruled in one of the funds offered by the life office. Then every month the lift office calculates the cost of life cover for the next month and deducts this charge bu cancelling just enough of the policy holders units to pay for it. Hopefully the value should increase at the start the premiums are cheaper and used to buy units. Value decrease over time - reviewed in 10 years then every 5
- each policy type has its own merits. However , the with profits contract offers the highest levels of fair Rees which an increasing level of cover while the flexible contract offers the greatest level of flexibility to match the changes in the clients circumstances.
- the flexible whole of life policy can offer the policy holder an opportunity rig to obtain high levels of cover at very low cost. Similar to long term life assurances contract or to place more emphasis on savings like endowment policies but with no fixed maturity date of a valance anywhere between the two.
Income protection
- benefits are not paid until the person is unable to work. Cheaper premiums would have a later start date. Deferment is time they have to wait ie what Tracy was talking about.
- exempt from income tax - insurers then use this to avoid the moral hazard of people earning more than they would working.
- used to be called Keenan want health policy insurance - the term still applies provided the premiums are paid unless there is a medical condition.
Personal accident it sickeness
- further deiffenrece to income protection is that the number of health and occupation questions asked in sickeness and accident proposal forms. More occupations are allowed to take place and people who take part in past times.
- benefit is likely to be paid quicker and in the form of a sum / 2 years
- cheaper then income protection
Accident sickness and unemployment cover
- similar to personal accident and sickeness insurance in that it pays out an income of the insured is unable to work through sickness or an accident. It also lags out if the insurers is made unemployed through no fault of their own. Like personal accident and sickness insurance ASI is an annual policy with a maximum payout period of 1-2 years . Premiums are more expensive than personal sickness but cheaper than others
Critical illness
-They pay lump sum as apposed to regular income.
-payment is made in the diagnosis of specified illnesses.
- CO is provided by standard alone policies but can also be incorporated in whole of lowlife term and endowment policies.
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Can be used for PMI or Mortgages or adjustments
- they used to be unit linked but now they are orotrdtion contracts with no investment element and are often combined with other life cover
PMI
- this allows clients to have private medical insurance
- they do not cover pre existing medical conditions
- if they don’t want a medical can do moratorium
Won’t pay out for certain conditions
