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CeMAP Unit 1 > Topic 12 Heath & General Insurance > Flashcards

Topic 12 Heath & General Insurance Flashcards

1
Q

What is Critical Illness Cover (CIC)?

A

Insurance that provides a lump sum to someone who can’t work due to serious illness

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2
Q

Is Critical Illness Cover taxable?

A

No it is a tax free amount

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3
Q

What do all these have in common?

  • Most Forms of Cancer
  • Heart Attack
  • Stroke
  • Coronary Artery Disease (needing surgery)
  • Major Organ Transplant
  • Multiple Sclerosis
  • Kidney Failure
A

Covered by Critical Illness Cover

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4
Q

What are the 3 core conditions for set out for Critical Illness Cover by the ABI?

A
  1. Cancer
  2. Heart Attack
  3. Stroke
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5
Q

What other type of disability are sometimes covered by Critical Illness Cover?

A
  • Paralysis
  • Blindness
  • Loss of Limbs
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6
Q

What are the typical uses of Critical Illness Cover?

A
  • Long Term Care
  • Alterations to Living Accommodation
  • Medical Equipment
  • Enhancing quality of life
  • Mortgage Repayment
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7
Q

What is Income Protection Insurance (IPI)?

A

Pays an income when accident or illness prevents somebody from performing their normal profession

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8
Q

Why might an Insurance company pay Income Protection Insurance to a person ill or disabled with child care responsibilities?

A

As the person may incur child care fees or housekeeping services

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9
Q

How are the premiums for Income Protection Insurance (IPI) determined?

A

By the occupation of the life insured

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10
Q

How many classes of occupation does Income Protection Insurance (IPI) have?

A

4 Classes from lowest to highest in order of risk and premiums paid

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11
Q

What class of premium would the below occupations fall into for Income Protection Insurance purposes?

  • Clerical
  • Professional
  • Administration
A

Lowest Risk

Class 1

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12
Q

What class of premium would the below occupations fall into for Income Protection Insurance purposes?

  • Hairdressers
  • Pharmacists
A

Low risk of accident

Class 2

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13
Q

What class of premium would the below occupations fall into for Income Protection Insurance purposes?

  • Farmers
  • Electricians
A

Moderate risk of accident

Class 3

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14
Q

What class of premium would the below occupations fall into for Income Protection Insurance purposes?

  • Manual Labourers
  • Industrial Chemists
A

Highest risk of claim/ accident/ health problems

Class 4

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15
Q

What are the below in relation to Income Protection Insurance (IPI)?

  • Age of life insured
  • Amount of Benefit
  • Current state of health
  • Past Medical History
  • Length of Deferred Period
A

Other factors that affect the premium of IPI a person pays

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16
Q

What are the 2 premium types of Income Protection Insurance (IPI)?

A
  1. Reviewable Premiums
  2. Guaranteed Premiums
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17
Q

What are the features for a Reviewable Premium for Income Protection Insurance?

A
  • Starts of with a low premium
  • Reviewed in the future
  • May increase
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18
Q

What are the features for a Guaranteed Premium for Income Protection Insurance?

A
  • More expensive at the start than Reviewable Premiums
  • Guaranteed for the policy’s term
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19
Q

What is the “ Deferred Period” on a Income Protection Insurance policy?

A

The period of that must elapse between the claim being made and the first benefits being received

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20
Q

All the below are what?

  • 4 Weeks
  • 13 Weeks
  • 26 Weeks
  • 52 Weeks
  • 104 Weeks
A

Typical Deferred Periods for Income Protection Insurance

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21
Q

Why would a self employed person opt for a shorter deferred period?

A

To avoid financial loss

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22
Q

shorter deferred periods have larger Premiums

True or False

A

True

The longer deferred periods have lesser premiums

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23
Q

What percentage of pre-illness wages does a Income Protection Insurance Policy pay?

A
  • 50% - 65%
  • 75% (Group Policy)
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24
Q

What is a “Proportion Benefit” of a Protection Insurance Policy

A

Where a reduced benefit is paid to a claimant who can return to work on reduced income

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25
Q

Which of these people would not pay tax & NIC on Income Protection Insurance benefits?

  • IPI set up a part of a group scheme
  • IPI set up individually
A

ICI set up individually

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26
Q

What is Accident, Sickness & Unemployment Insurance (ASU)?

A

A tax free short term insurance that covers mortgage repayments due to:
- Accident
- Illness
- Loss of employment

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27
Q

How does Accident, Sickness & Unemployment Insurance (ASU) work?

A

A level of income is paid to cover the mortgage repayments for a period of 2 years

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28
Q

What happens if a Accident, Sickness & Unemployment Insurance (ASU) claimed is dismissed or resigns voluntarily from their job?

A

They will not receive an income as the policy does not paid out under these circumstances

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29
Q

Who is the proposer on a Accident, Sickness & Unemployment Insurance (ASU) policy?

A

Individual applying for the policy

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30
Q

How are Accident, Sickness & Unemployment Insurance (ASU) & Income Protection Insurance (IPI) similar?

A

The both have a deferred period

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31
Q

These are what?

  • Proposer must have been actively & continuously employed for a specified minimum period before starting the plan
  • Any redundancy that the proposer beleived was pending is excluded
  • Not payable if redundancy starts within a period of cover starting
A

Restrictions on Accident, Sickness & Unemployment Insurance (ASU) cover

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32
Q

How often is an Accident, Sickness & Unemployment Insurance (ASU) reviewed?

A

Annually

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33
Q

What can an insurer do in relation to Accident, Sickness & Unemployment Insurance policy (ASU) that they cannot do on an Income Protection Insurance Policy (IPI)?

A

Increase the premium or withdraw the cover for persist claimers

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34
Q

True of False

A person who sets up their own Accident, Sickness & Unemployment Insurance (ASU) individually receives tax relief on contributions?

A

False

They do not receive tax relief

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35
Q

What is Private Medical Insurance (PMI)?

A

Protection plan to provide cover for private medical treatment

36
Q

What are the benefits of Private Medical Insurance (PMI)?

A
  • Avoidance of waiting lists
  • Choice of hospital
  • Flexibility in timing of treatment
  • High quality accommodation
  • Choice of medical consultant
37
Q

Private Medical Insurance (PMI) reimburses charges but what are the below charges related to?

  • Nursing Fees
  • Accommodation
  • Operationing fees
  • Drugs
  • Ambulance costs
A

In-patient charges

38
Q

Private Medical Insurance (PMI) reimburses charges but what are the below charges related to?

  • Surgeons fees
  • Anesthetics fees
  • Pathology
  • Radiology
A

Surgical and medical fees

39
Q

Private Medical Insurance (PMI) reimburses charges but what are the below charges related to?

  • Consultant fees
  • Home Nursing fees
  • Pathology
  • Radiology
A

Out-patient charges

40
Q

How can Private Medical Insurance (PMI) be arranged?

A
  • Individually
  • Employer Scheme
41
Q

What’s affects the premiums for Private Medical Insurance?

A
  • Location
  • Type of Hospital
  • Standard of accommodation
  • Type of scheme taken out
  • Applicants age
42
Q

What are all the below?

  • Pre existing medical conditions
  • Standard optical care
  • Standard dental care
  • Standard maternity care
  • Chiropody
  • Self inflicted aliments (substance abuses)
  • Cosmetic surgery
  • Alternative medicine
A

Exclusions to Private Medical Insurance (PMI)

43
Q

Are the premiums for Private Medical Insurance (PMI) subject to tax?

A

Yes they are subject to tax for individual and work scheme policies

44
Q

True or False

The benefits of Private Medical Insurance (PMI) paid out are tax free?

A

True

45
Q

What is Long Term Care Insurance (LTC)?

A

Insurance that provides funds for people in later life when they can no longer look after themselves competently

46
Q

All these are examples that what type of insurance is required more than ever.

  • Family may live some distance away
  • People are living longer
  • Quality of later life expectations have increased
  • Lack of confidence in NHS to provide later life care
A

Long Term Care Insurance (LTC)

47
Q

How are benefits for Long Term Care Insurance (LTC) calculated?

A

The are dependant on the person ability to carry out activities of daily living (ADL’s)

48
Q

What are the below?

  • Washing
  • Dressing
  • Feeding
  • Using the toilet
  • Movement between rooms
  • Preparing food
A

Examples of Activities of Daily Living (ADL)

49
Q

True or False

The more Activities of Daily Living (ADL) that a person cannot carry out the greater the benefits of Long-Term Care Insurance (LTC) they receive?

A

True

50
Q

How many Activities of Daily Living (ADL) would a person need to be incapable of before a claim for Long Term Care Insurance (LTC) to be accepted?

A

2-3

51
Q

What happens to an annuity that is purchased with an immediate long term care need?

A

The benefits are paid direct to the care provider tax free provided it is a Immediate Needs Annuity

52
Q

What is a “Immediate Needs Annuity”?

A

An annuity that is used to pay for care needs the customer already has

53
Q

What is a “Deferred Needs Annuity”

A

An investment builds funds that can then be used to pay for care as needed

54
Q

If an annuity is not deemed as an “Immediate Needs Annuity” how is tax charged?

A

On the interest element as savings. 20% is deducted at source. Higher & Additional rate tax payers will need to pay at appropriate bands

55
Q

What does “life of another” mean in relation to Long-term care insurance?

A

Means benefit is still paid tax free provided they are used for the person under the policy & sent straight to the care provider.

56
Q

How many groups in is General Insurance categorised into?

A

5 but is split into an further 2.

  1. Property & Commercial
  2. Commercial
57
Q

What type of general insurance does the below loss fall into?

  • Property loss
  • Liability loss
A

Personal & Commercial

58
Q

What type of general insurance does the below loss fall into?

  • Personnel loss
  • Pecuniary loss (defaulting creditors)
  • Interruption loss (causes by another of the above losses)
A

Commercial

59
Q

What type of insurance does an “Indemnity” relate to?

A

General Insurance policies

60
Q

What is the definition of an Indemnity?

A

That claimants should be restored to the same financial position as before the loss occurred.

61
Q

For a Life & Personal accident policy what are the common ways insurance companies restore claimants?

A
  1. Cash
  2. Repair (Motor Insurance)
  3. Replacement
  4. Reinstatement
62
Q

These are examples of why a policyholder would do what?

  • Unsure of appropriate figure
  • Inflation increased the amount assured
  • Deliberate to keep the premium down
A

Under Insure items

63
Q

What does the “principle of average” mean to a claim for insurance?

A

Claim is scaled down to the proportion of the premium paid against the premium that should have been paid for proper value

64
Q

What is an Excess?

A

A deduction made from any claim payment to a policy holder

65
Q

What is Buildings Insurance?

A

Cover on anything left on property if this were to be sold

66
Q

What are the below examples of?

  • Fire & lightning strikes
  • Explosions, Subsidence, Earthquake
  • Storms & Floods
  • Damage by vehicles, aircraft, animals
  • Damage by trees, TV aerials
A

cover of buildings insurance

67
Q

What is Contents Insurance?

A

Anything that would be taken with you if you were to sell a property

68
Q

What are the below examples of?

  • Accidental damage to goods caused by professional removers
  • Extended contents cover for specified personal property outside the home
  • Damage to freezer due to electricity failure
A

Additional examples of contents insurance

69
Q

What is All Risks (Extended Contents) Cover

A

Cover policy holder for loss, damage or theft of items regularly taken out of the home

70
Q

What are the 2 types of All Risk Cover?

A
  1. Unspecified Items
  2. Specified Items
71
Q

What are the 3 types of Motor Insurance?

A
  1. Third Party
  2. Third Party, fire & theft
  3. Comprehensive
72
Q

What is Third Party Cover?

A

Is a car insurance that is does not involve the policy holder in an accident.

73
Q

Does Third Party Cover also cover the policy holder driving another vehicle?

A

Yes

74
Q

What are the below?

  • Death or Injury to third party (hospital charges)
  • Damage to property
  • Legal costs incurred in defence of claim
A

Typical Third party cover

75
Q

What extras do Third party, fire & theft offer over Third party cover only?

A

Extra elements to cover fire and theft of the vehicle

76
Q

The below are extras of what type of car insurance types?

  • Damage to cover on all terms basis
  • Loss/damage of times in vehicles
  • Personal accident benefits
  • Windscreen damage
A

Comprehensive Motor Insurance

77
Q

True or False

A certificate of insurance is of no effect unless a document of insurance can be provided?

A

True

78
Q

When is travel insurance typically paid?

A

On Journey from:

  • 5 days to 1 month
  • Annually
79
Q
  • Cancellation due to illness
  • Missed flights
  • Medical expenses
  • Delayed departures
  • Personal expenses
  • Loss of passport or possessions
  • Personal Liability
  • Legal expenses
A

Typical examples of Travel Insurance

80
Q

What is Insurance Premium Tax (IPT)?

A

Is a tax on General Insurance Premiums

81
Q

Who pays Insurance Premium Tax (IPT)?

A

The policy holder as part of the premium

82
Q

What is Payment Protection Insurance (PPI)?

A

Protection that covers monthly loan repayments if the policy holder is unable to pay due to sickness, accident or unemployment.

83
Q

What is Payment Protection Insurance (PPI) paid on?

A

A specified lending product

84
Q

What is the usual payment period of Payment Protection Insurance (PPI)?

A

12 months

85
Q

It is illegal to drive on the roads without a policy of insurance that covers a third party risk?

True or False

A

True

86
Q

Life Assurance and Income Protection Insurance (ICP) are subject to Income Premium Tax (IPT)?

True or False

A

False

Income Premium Tax (IPT) is not applicable to Long Term Insurance

87
Q

Other than a deferred period why else are Accident, Sickness & Unemployment Insurance (ASU) & Income Protection Insurance (IPI) similar?

A

Both benefits are paid tax free

CeMAP Unit 1 (18 decks)

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