Topic 4 - Dealing With Long-Term Risks Flashcards
Current bank rate
0.25%
Risk transfer meaning
Person who faces a risk decides to spend money on passing the risk to someone else, who will accept the financial responsibility
Aspects to impact of risk
Amount of money involved
Effect on lifestyle
Timing of event
Frequency of event
Significance of risk formula
Significance of risk = probability x impact
Two life assurance protection policies
Whole-of-life assurance
Term assurance
How does whole-of-life assurance work?
Sum assured is payable on the death of the life assured
How does term assurance work?
Sum assured is payable only if the person assured dies before end of a specified term.
How does critical illness cover work?
A guaranteed lump sum is paid out if insured person is diagnosed with a critical illness.
How do income protection policies work?
Monthly income is paid to insured people who have suffered an accidental injury or a long-term illness and who are unable to work
How does accident, sickness and unemployment (ASU) work?
They provide cover to the insured party in the event of an accident or sickness that prevents them from working if they have become involuntarily unemployed
It pays out for a maximum of 12 or 24 months,
FSCS offers maximum protection of how much on deposits in banks, building societies and credit unions?
£75,000 per person
FSCS offers maximum protection of how much on investments?
100% of first £50,000 per person per firm
FSCS offers maximum protection of how much on home finance e.g. mortgage advice?
100% of first £50,000 per person per firm
FSCS offers maximum protection of how much on long-term insurance e.g. pensions?
90% of claim with no upper limit
FSCS offers maximum protection of how much on compulsory insurance?
Claims are protected in full
