TOPIC 11 - Life assurance Flashcards
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) 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.
c) Jenny’s policy will not benefit from regular bonuses.
d) The value of units on Jenny’s plan will be lower.
b) Part of the death benefit on Jenny’s policy is on a reducing basis.
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 are likely to increase after ten years.
c) plan will accumulate a higher investment value than a minimum cover policy.
d) premiums will be higher than those of a balanced cover policy.
b) premiums are likely to increase after ten years.
Which of the following is true of a unitised with-profits endowment?
a) Only terminal bonuses are added.
b) It cannot be assigned to a lender.
c) Unit values cannot fall.
d) The full unit value is payable on surrender of the policy.
c) 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) Non-profits.
b) Low-cost with profits.
c) Unit-linked.
d) With-profits.
c) Unit-linked.
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) Income protection benefit.
b) Temporary disability cover.
c) Terminal illness benefit.
d) Waiver of premium benefit.
d) Waiver of premium benefit.
Charu and Rajeev have written wills leaving everything to the survivor, and on their death the estate will pass to their children. They wish to provide a lump sum for the children to be able to settle any inheritance tax (IHT) liability on their inheritance. What life assurance arrangement would achieve their objective?
a) A joint-life first-death whole-of-life plan for the potential IHT liability, in trust.
b) A joint-life second-death whole-of-life plan for the potential IHT liability, in trust.
c) Two single whole-of-life plans, in trust, each for 50% of the potential IHT liability.
d) A joint-life second-death gift inter vivos policy for the potential IHT liability, in trust.
b) A joint-life second-death whole-of-life plan for the potential IHT liability, in trust.
The most appropriate life assurance policy to protect a repayment mortgage would be a form of:
a) level term assurance.
b) increasing 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) increase.
b) fluctuate.
c) stay level.
d) decrease.
a) increase.
A single parent wants to provide an income for his two children in the event of his death, payable until the youngest child is 21. What type of life assurance policy would suit his requirements and cost the least?
a) Low-cost endowment.
b) Family income benefit.
c) Whole-of-life assurance.
d) Level term assurance.
b) Family income benefit.
Where a claim is made on a term assurance policy the benefits
payable are always free of income tax. True or false?
True – term assurances have no investment element so proceeds are paid
tax free
What is the main benefit of a convertible term assurance?
A convertible term assurance allows conversion of some or all of the plan
to a different type of plan, at a later date, without the life assured having
to provide evidence of their state of health
Which of the following statements relating to term assurance
is correct?
a) A decreasing term assurance will pay benefits only if the
insured dies within the policy term.
b) Gift inter vivos cover is maintained at the same level for
seven years.
c) A convertible term assurance policy can be converted to
an endowment or whole of life assurance only within two
years of the date of the original policy.
d) If a convertible term assurance policy is converted to an
endowment, the maturity date of the new policy must
not be more than five years later than that of the original
policy.
a) A decreasing term assurance will pay benefits only if the
insured dies within the policy term.
Which of the following is true of a whole of life policy?
a) It is designed to provide protection rather than investment.
b) Premiums are always payable throughout the full term of
the policy.
c) It can only be used on a with profits basis.
d) It will pay out only on the death of the insured and cannot
be surrendered.
a) It is designed to provide protection rather than investment.
Duncan and Alice, who are married, are taking out a whole of life
plan to provide for payment of inheritance tax liabilities on
their deaths. The policy would normally be set up in which of
the following ways?
a) Two single lives.
b) Single life.
c) Joint life first death.
d) Joint life second death.
d) Joint life second death.
