TOPIC 12 - Health and general insurance Flashcards
Sean has been claiming on his income protection insurance policy for six months and has now been cleared to return to work on a part-time basis on a lower salary. What policy feature would solve his concern about the reduced income?
a) increasing benefit.
b) Suspension of premiums during a claim.
c) A shorter deferred period.
d) Proportionate (pro-rata) benefit.
d) Proportionate (pro-rata) benefit.
Which of the following statements is true in relation to income protection insurance (IPI)?
a) It is the same as an ASU policy, but without redundancy cover.
b) A tax-free income benefit will be payable after a specified period of incapacity.
c) Benefits are paid for a maximum of 12 or 24 months.
d) IPI provides a surrender value for early surrender.
b) A tax-free income benefit will be payable after a specified period of incapacity.
Which of the following would be least likely to be covered on a critical illness assurance policy?
a) Breast cancer.
b) Kidney failure.
c) Angina.
d) Heart attack.
c) Angina.
The Road Traffic Act 1988 requires all vehicles to have at least:
a) third-party insurance.
b) Road Traffic Act insurance.
c) comprehensive insurance.
d) third-party, fire and theft insurance.
a) third-party insurance.
Payment protection insurance:
a) provides benefits in the event of death, accident, sickness or unemployment.
b) is not covered by the Financial Services Compensation Scheme.
c) pay outs are typically limited to 12 months.
d) can cover the applicant’s combined borrowing.
c) pay outs are typically limited to 12 months.
Billie insured her house contents for £30,000 and accepted a £100 excess. Later that year she made a claim for £5,000 as a result of local flooding. The insurer has written to her, stating that the true value of her contents should have been £40,000 and that they are disputing her claim. How much is Billie likely to receive in settlement of her claim?
a) The insurer will reject her claim as she was underinsured.
b) Billie is likely to receive £3,650.
c) Billie is likely to receive £3,750.
d) The insurer is likely to pay the claim in full, as the underinsurance was unintentional.
b) Billie is likely to receive £3,650.
Which of the following is true in relation to long-term care insurance?
a) Inability to move between rooms would be an activity of daily living for a claim.
b) Any annuity payments from a long-term care plan are tax free.
c) Long-term care benefits are only payable when the insured is in a care home.
d) Inability to carry out four or more activities of daily living is required for a successful claim.
a) Inability to move between rooms would be an activity of daily living for a claim.
In relation to insurance for commercial purposes, pecuniary loss is a loss resulting from:
a) criminal damage of vandalism.
b) an interruption to a business’s operation.
c) a defaulting creditor.
d) injury, illness or death of an employee.
c) a defaulting creditor.
Andrea has private medical insurance, paid for by her employer as part of her employment package. Which of the following would not apply?
a) Premiums qualify as business expenses for her employer.
b) An income tax liability for Andrea on payments made in the event of a claim.
c) An income tax liability for Andrea on the value of the premiums.
d) Insurance premium tax on the premiums.
b) An income tax liability for Andrea on payments made in the event of a claim
In relation to insurance for commercial purposes, pecuniary loss is a loss resulting from:
a) criminal damage of vandalism.
b) an interruption to a business’s operation.
c) a defaulting creditor.
d) injury, illness or death of an employee.
c) a defaulting creditor.
When Gary was diagnosed with bowel cancer at the age of 50, he was able to use the lump sum he received under his insurance policy to pay off his outstanding mortgage. Which of the following types of insurance did Gary have?
a) Private medical insurance.
b) Income protection insurance.
c) Critical illness insurance.
d) Long term care insurance.
c) Critical illness insurance.
Marco, a self employed painter and decorator, is considering
taking out income protection insurance. He should opt for as short a deferred period as possible. True or false?
True. Marco’s income will reduce very rapidly if he is unable to work. He should opt for a short deferred period rather than a long one.
Marco’s partner Lydia, an HR manager, already has income protection insurance. If she claims under her policy, she will
have to pay tax and NICs on the income she receives. If Marco goes ahead and buys income protection, he will not pay tax or NICs if he has to claim benefits under the policy. This is likely
to be because:
a) Marco’s earnings are below the personal allowance for
income tax.
b) Marco’s policy will be arranged on an individual basis whereas Lydia’s policy has been arranged as part of a group scheme.
c) Marco is self employed whereas Lydia is an employee.
d) The insurance provider from whom Marco is thinking of buying his policy has different rules to Lydia’s insurance
provider.
b) Marco’s policy will be arranged on an individual basis whereas Lydia’s policy has been arranged as part of a group scheme.
Adaeze, an office administrator, hurts one of her hands, causing permanent damage, and has to be re employed on a lower salary. What effect would her return to work have on her IPI benefits?
a) Full benefits would be paid until Adaeze has fully recovered.
b) Proportionate benefits would be paid, but no other claims under the policy would be accepted by the insurance company.
c) Benefits would cease immediately.
d) Proportionate benefits would be paid until retirement, death or the end of the policy.
d) Proportionate benefits would be paid until retirement, death or the end of the policy.
Annette, who retired last year, has developed arthritis and needs a hip replacement. Under which of the following types
of insurance policy might she be eligible to claim benefits?
a) Critical illness cover.
b) Accident, sickness and unemployment insurance.
c) Private medical insurance.
d) Income protection insurance.
c) Private medical insurance.
