Topic 16 - Financial Protection & Planning

Question 1

Protection for dependants in the event of death or illness is likely to be most crucial at which life stage?

Young, single person.

Younger couple with children.

Middle-aged couple, children have left home.

Answer 1

Younger couple with children.

Question 2

PMI may become a priority at which life stage?

Young, single person.

Younger couple with children.

Middle-aged couple, children have left home.

Answer 2

Middle-aged couple, children have left home.

Question 3

Financial protection through life assurance is unlikely to be a priority for which of the following?

Young, single person.

Younger couple with children.

Middle-aged couple, children have left home.

Answer 3

Young, single person.

Question 4

“I find income protection policies hard to understand.” This customer is voicing which reason for underinsurance?

It won’t happen to me.

Product complexity.

State provision.

Answer 4

Product complexity.

Question 5

If a mortgaged property owner dies, the survivor might end up with the whole mortgage while owning only half the value of the property if it was registered:

as tenants in common.

as a joint tenancy.

in the deceased’s sole name.

Answer 5

as tenants in common.

Question 6

If a person has an amount of protection already in place, they are likely to have no shortfall. True or false?

Answer 6

False

Question 7

Protection funds may be used to meet what liabilities without selling property?

Income.

IHT.

Tenancy.

Answer 7

IHT

Question 8

The shortfall in protection cover can be expressed as the difference between the amount of protection that would be needed if the risk event happened, and the:

amount of protection the client desires.

amount of protection the client currently has.

amount of protection the client will have in five years’ time.

Answer 8

amount of protection the client currently has.

Question 9

The mortgagee will both recommend and arrange life cover. True or false?

Answer 9

False

Question 10

Which of the following protection needs is generally prioritised highest?

Protection of dependants from the effects of loss of income in the event of premature death.

Protection of income for a time later in life when the client does not want to work.

Protecting self and dependants from the effects of losing the ability to earn an income in the long term.

Answer 10

Protection of dependants from the effects of loss of income in the event of premature death.

Question 11

A person’s reliance on earned income should have ceased by retirement. True or false?

Answer 11

True - Reliance on earned income will have ceased by retirement. This reduces the need for protection in the event of death or illness, because the individual no longer relies on their ability to work to generate income.

Question 12

PMI is aimed at covering:

acute conditions.

chronic conditions.

debilitating conditions.

Answer 12

acute conditions. - PMI is aimed at covering acute conditions, which develop rapidly and respond to treatment.

Question 13

If a mortgaged property owner dies, the survivor will still have an outstanding mortgage on the property, even though they become the sole owner. What form of ownership does this describe?

Registered in the deceased’s sole name.

Registered as a joint tenancy.

Registered as tenants in common.

Answer 13

Registered as a joint tenancy.

Question 14

Life cover is likely to be more important for someone who is single with no dependants than it is for a client with a family. True or false?

Answer 14

False - Life cover is likely to be less important for a single person with no dependants.

Question 14

“I feel confident that the government will help me out if things go wrong.” This person is voicing which reason for underinsurance?

Affordability perception.

Consumer trust.

State provision

Answer 14

State provision

Question 15

Some people want to meet certain tax liabilities without selling property. This relates to which tax?

IHT.

Income tax.

Capital gains tax.

Answer 15

One use of protection policy funds is to meet IHT liabilities without selling property.

Question 16

In the event of a person’s death, a surviving family member may require additional capital to cover mortgages, other debts or:

adaptations to the home.

funeral costs.

medical care.

Answer 16

Funeral costs. - Funeral costs are a common additional capital need in the event of death.

Question 17

More than half of customers without life assurance say they would be encouraged to take out:

simple, low-cost cover.

simple, high-cost cover.

complex, low-cost cover.

Answer 17

simple, low-cost cover.

Question 18

Mortgages and other debts may be reduced, or perhaps paid off, for which of the following people?

Younger couple with children.

Young, single person.

Middle-aged couple, children have left home.

Answer 18

Middle-aged couple, children have left home. - Mortgages and other debts may be reduced, or perhaps paid off, for a middle-aged couple whose children have left home, thus reducing the need in some areas of protection.

Question 19

In prioritising protection needs, the overriding consideration is to:

ensure adequate protection of what the client expects to have in the future.

ensure adequate protection of what the client currently has before looking to improve things for the future.

ensure mediocre protection of what the client currently has before looking to improve things for the future.

Answer 19

ensure adequate protection of what the client currently has before looking to improve things for the future.