Topic 11 Flashcards
Life assurance
On a with-profits policy, what is a reversionary bonus?
a. A payment made on maturity, reflecting the investment performance over the term of the policy.
b. A payment that is declared regularly and once allocated to the policy, cannot be removed.
c. A payment that is pre-set at an anticipated bonus rate, but is reduced if investment performance is less than anticipated.
d. An irregular payment, made at the discretion of the insurance company from orphan funds.
b. A payment that is declared regularly and once allocated to the policy, cannot be removed.
If Chris and Kim opt for a joint repayment mortgage, the most suitable way to ensure that the loan will be repaid if either of them dies is by:
a. taking out a critical illness policy.
b. taking out a mortgage protection assurance policy.
c. taking out an income protection insurance policy.
d. investing in an endowment assurance policy.
b. taking out a mortgage protection assurance policy.
Maurice has a convertible level term assurance policy and is about to convert the policy to a new policy with the same sum assured.
Which of the following is true?
a. No investment content can be included in the new policy.
b. No medical underwriting is necessary at the point of conversion.
c. The new policy term must be the same as on his existing policy.
d. The regular premium he is currently paying will not change.
b. No medical underwriting is necessary at the point of conversion.
A mortgage protection assurance policy is a type of:
a. convertible term assurance.
b. decreasing term assurance.
c. increasing term assurance.
d. level term assurance.
b. decreasing term assurance.
Which of the following endowment policies typically carries the highest level of investment risk?
a. Non-profit.
b. Unit-linked.
c. Unitised with-profits.
d. With-profits.
b. Unit-linked.
Which of the following is least likely to be available under a universal whole-of-life assurance policy?
a. Hospital benefit.
b. Income protection insurance.
c. Total and permanent disability cover.
d. Unemployment cover.
d. Unemployment cover.
Michael requires a life policy to pay out a guaranteed fixed cash value at maturity and needs the level of life cover and premiums to remain fixed throughout the term.
Which of the following types of policy would be most suitable?
a. Low cost with-profits endowment assurance.
b. Non-profit endowment assurance.
c. Unit-linked endowment assurance.
d. Universal whole-of-life assurance.
b. Non-profit endowment assurance.
Which of the following is true of a unitised with-profits endowment?
a) The full unit value is payable on surrender of the policy.
b) Unit values cannot fall.
c) It cannot be assigned to a lender.
d) Only terminal bonuses are added.
b) Unit values cannot fall.
In strong stock market conditions, which type of mortgage-linked endowment is most likely to allow early repayment of the mortgage?
a) Unit-linked.
b) Low-cost with profits.
c) Non-profits.
d) With-profits.
a) Unit-linked.
What is the normal maximum age for exercising the renewal option on a renewable term assurance policy?
a) 50.
b) 55.
c) 60.
d) 65.
d) 65.
Jim has a with-profits whole-of-life plan, and Jenny has a low-cost with-profits whole-of-life plan, both offering the same death benefit. The main difference in the two plans is that:
a) Jenny’s policy will not benefit from regular bonuses.
b) Part of the death benefit on Jenny’s policy is on a reducing basis.
c) The value of units on Jenny’s plan will be lower.
d) The fixed death benefit on Jim’s plan will be lower.
b) Part of the death benefit on Jenny’s policy is on a reducing basis.
The most appropriate life assurance policy to protect a repayment mortgage would be a form of:
a) increasing term assurance.
b) level term assurance.
c) convertible term assurance.
d) decreasing term assurance.
d) decreasing term assurance.
During the lifetime of a full with-profits endowment, the death benefit should:
a) fluctuate.
b) increase.
c) decrease.
d) stay level.
b) increase.
Jason has a flexible whole-of-life assurance policy on a maximum cover basis. This means that Jason’s:
a) sum assured will increase after ten years.
b) premiums will be higher than those of a balanced cover policy.
c) plan will accumulate a higher investment value than a minimum cover policy.
d) premiums are likely to increase after ten years.
d) premiums are likely to increase after ten years.
What add-on benefit will ensure a life assurance policy will continue to provide cover when premiums are suspended due to the policyholder’s illness preventing them from working?
a) Temporary disability cover.
b) Waiver of premium benefit.
c) Income protection benefit.
d) Terminal illness benefit.
b) Waiver of premium benefit.
