Topic 2 Flashcards
What is the main difference between a whole-of-life policy and an endowment policy??
An endowment policy will generally have a maturity date.
Most life insurance policies are considered to be non- cancellable. True/false??
True.
Can only be cancelled if insured didn’t disclose information at application stage or can be cancelled if insured reaches age 65.
Generally, for whole of life and endowment policies, how is the sum insured calculated??
Multiplying the yearly premium by the term of the policy.
What is “any occupation” for TPD insurance?
Any occupation is where the insured is unable to work again in any occupation for which they have training or experience.
What is “own occupation” in TPD insurance?
Own occupation is where the life insured is unable to work again in their own occupation.
What is business overheads insurance??
Covers the fixed, non income producing expenses of a business that accrue if the life insured is unable to work in their own occupation due to illness or sickness.
What are the 3 types of business overheads insurance?
- Indemnity
- Reimbursement( same as indemnity, but ongoing business expenses are not used to calculate sum to be reimbursed)
- Agreed value
What is the rebate available on assessable income for insurance bonds?
30%
What is the RCV on annuities?
The Residual Capital Value is the amount to be returned to policy owner at the end if the contract.
The term and RCV is set at the start of policy.
Does the income generated from an annuity generally form part of the individuals assessable income?
Yes.
What is key person insurance?
Protects a business in the event of a loss of a person who makes a significant contribution the business.
There is key person revenue and key person capital.
Business liability is broken into 2 what categories?
External liabilities and internal liabilities.
Business related liabilities are generally not found on the balance sheet, but on the ?
Profit and loss statement.
What is buy/sell insurance??
Insurance that provides the funding mechanism to allow a surviving business partner to acquire the share it the business from the other party.
It is best to have these policies as a self- ownership structure to allow the life insured to leave the business and maintain control of the policy.
No tax implications in the event of a payout.
When a superfund including SMSF’s own a life insurance policy, the death, TPD and income protection premiums are tax deductible. True/ false.
true
