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CeMAP 1 (Unit one) > Topic 12 (Health and General insurance) > Flashcards

Topic 12 (Health and General insurance) Flashcards

1
Q

What is Critical Illness cover?

A

Cover that provides a tax-free lump sum upon diagnosis of a critical illness/medical condition

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2
Q

What are some typical uses of critical illness cover?

A
  • Long term car
  • Alterations to living accommodation
  • Medical equipment
  • Mortgage repayment
  • Enhancing quality of life
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3
Q

What is income protection insurance? (IPI)

A

Pays out a regular income when accidentally/illness prevents someone from earning a living

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4
Q

What major factor affects premium rate?

A

The occupation of the life assured (normally split into classes that determine the level of premium)

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5
Q

How are premiums on IPI structured?

A

Renewable Premiums
- start low and increase in future, the premium may be renewable

Guaranteed Premiums
- more expensive as premiums don’t increase

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6
Q

When and how are benefits taxed?

A
  • payments begin after the deferment period
  • the longer the deferred period the cheaper the premium
  • max. benefit is usually 50-75% of pre-disability earnings
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7
Q

How are IPI benefits taxed?

A
  • Policy on a individual basis is tax-free

- Group basis, any income paid is subject to tax and national insurance

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8
Q

What is ASU insurance?

A

Accident, Sickness and Unemployment

-used to cover mortgage payments (for a maximum of 2 years)

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9
Q

What makes ASU different to IPI?

A

Asu policies should be viewed as short term products rather than providing protection for earned income

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10
Q

How are ASU benefits taxed?

A

benefits are tax-free, but no tax relief is available

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11
Q

What is PMI?

A

Private Medical Insurance

  • a pure protection plan
  • can provide a daily rate of income
  • can cover those not working
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12
Q

What does cover normally include the reimbursement off with PMI?

A
  • In patient charges
  • Surgical/medical fees
  • Outpatient charges
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13
Q

What factors affect the cost of cover?

A
  • Location
  • Type of hospital
  • Accommodation
  • Type of scheme taken out
  • Age of the person
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14
Q

In terms of PMI, how are benefits and premiums taxed?

A

Premiums are subject to insurance-premium tax and benefits are tax-free

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15
Q

What is long-term care insurance? (LTC)

A

Provides funds to meet the cost of care that arises at a later point in life

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16
Q

How are levels of benefits determined?

A

depends on the individuals requirements and the ability to carry out activities of daily living (ADL’s)

17
Q

’ the greater number of ADL’s that can’t be performed the greater amount…….’

A

of care required, therefore a higher level of benefit paid

18
Q

How are benefits taxed?

A

There must be an immediate annuity in order for benefits to be tax-free

19
Q

What is Annuity?

A

A financial product purchased with a lump sum which then pays out regular income

20
Q

What is immediate needs annuity?

A

An annuity from which the benefits are used to pay for care needs that the insured already has (tax-free)

21
Q

What is a deferred needs plan?

A

An investment designed to build up funds that can then be drawn on to pay for care needs as and when required

22
Q

What is General Insurance?

A

Covers all types of insurance that are not life insurance

23
Q

What are the 5 categories of General insurance?

A 
Personal ad commercial:
1. property loss
2. liability loss
Commercial only:
3. personal loss
4. pecuniary loss
5. interruption loss
24
Q

What is Indemnity?

A

General insurance policies
-In the event of a claim, the insured person should be restored to the same financial position after a loss that they were in before loss occurred)

25
Q

Why might policyholders underinsure?

A
  • they were unaware of the appropriate figure
  • inflation has increased the amount required
  • deliberately understanding the figure to keep the premium down
26
Q

What is Excess?

A

A deduction made from any claim payment

27
Q

What is Buildings Insurance?

A

Cover is provided against:

  • fire/lightening
  • explosions/earthquakes
  • storms/floods
  • damage by animals/vehicles
  • damage by nature
28
Q

What is the term ‘building’ defined as

A

Anything that would normally be left behind if the property were sold

29
Q

Some types of cover are subject to the property being left vacant for more than 30-60 days, what type of cover is then included?

A
  • riot, civil commotion and vandalism
  • theft/attempted theft
  • burst water pipes/oil leakages
30
Q

What is contents insurance?

A

Cover provided for anything you would normally take with you when your property is sold

31
Q

What is all-risks cover?

A

Covers the property that is regular taken outside the home (split into 2):

  1. unspecified terms
    - each item must be less than a certain value
  2. specified term
    - individually listed
32
Q

What are the 3 main types of Motor insurance cover?

A

i- third party only
ii- third party, fire and theft
iii- comprehensive

33
Q

What does 3rd party cover provide cover for?

A
  • death/injuries to third parties
  • damage to property
  • legal costs incurred in the defence of a claim
34
Q

What does 3rd party, fire and theft cover provide?

A
  • fire, lightening or explosion damage to vehicle

- theft of the vehicle

35
Q

What does Comprehensive cover provide?

A
  • accidental damage to vehicle
  • loss/damage to personal items
  • personal accident benefits
  • windscreen damage
36
Q

What cover does travel insurance provide?

A
  • cancellation due to injury/sickness
  • missed flights due to transport failure
  • delayed departures
  • medical expenses
  • loss of personal possessions (passport)
  • personal accident
37
Q

What are the key features of Insurance Premium Tax? (IPT)

A
  • Standard rate of IPT is 12% of the premium
  • Travel insurance premiums are taxed at 20%
  • IPT is paid by the policyholder and collected by the insurer
38
Q

What is payment protection insurance? (PPI)

A

Covers monthly loan repayments if the policyholders salary reduces due to accident, sickness or unemployment (pays out usually for 12 months)

CeMAP 1 (Unit one) (16 decks)

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