Topic 6 Flashcards
Whole of life assurance?
No term
Remains in force as long as premiums paid
Usually Provides element of investment
Vast majority with profits or unit linked
Can make plan ‘paid up’
Non-profit plans- sum assured, premium fixed
Insurable interest means…
They would suffer financial as a result of the death Eg spouse Creditor Employer Bus partner
With profits wol?
Premiums invested in fund Fund covers 'liabilities', expenses, reserves Expenses not transparent GSA est on set up Premiums are fixed at start Reversionary bonus increase gsa- added if fund is healthy Can be added as simple bonus- % of gsa Or compount % of gsa + bonuses Often get terminal bonus Offer loans againt current cash value No maturity date- wol
Low cost with profits wol?
Gsa is lower
Relys on bonuses to increase to required sum assured
Incorps temp life cover to plug the gap until sum assured at required amount
Unit linked wol?
Refered to as flexible
Wide range of funds to choose from
Charges for life cover, fees, add benefits are taken by cashing unit
Charges are clearly stated
Premium not set, prem range for each sum assured but reviewed at 10 yr point then 5 yrly, lower if range likely to need incr
3 levels of cover, max, min and balanced- life cover/invest ratio
SA usually guaranteed for 10 years
Initial charge- bought at offer price then valued at bid price(lower)
Diff being bid-offer spread
Universal wol
Flex of unit linked wol extended further by range of benefits:
IPI, CIC, TPD etc
Addition cost met by cashing more units
Uses of wol assurance?
Protect dependants
Tax free legacy, cover expenses on death
To pay IHT
Renewable term assurance?
Renewed at end without med evident
Same as original term
Convertable term?
Can be converted to wol or endow policy with med evidence
Family income benefit?
Form of DTA but regurlar incme pymts
Income paid from death to endof orig term
Income free of tax as it is installment of sum assurred
Income for family over defined period
Uses for term assurance?
Where need is for a defined term eg mort
Family protection where period needed predicable
IPI?
Used to be PHI- for long term dis or illness
50-60% of income, until recovered or end of term
Perm, cannot be cancelled by insurer
Agreed derferred period
Benefits tax free for individual policies
If company owed, the employee recieves as paye and taxed
Good for self emp
3 types of IPI
Reviewable- premium may starts off low, but reviewed every few years to take into account changing circs
Renewable- as above but reviewed each time renewed
Guaranteed- prems guaranteed for whole of policy term, more expenses as term may be 25 years
ASU?
Like IPI but cover redundancy
Renewable contract so can be cancelled by incurer
Benefits cease after 1 or 2 yrs
Self emp usually excluded
Long term care insurance?
Long term nursing for sick or elderly
For inability to carry out ‘activities of daily living’ ADLs
Premiums are taxable
Benefits are taxed unless used to buy annuity- in which the income would be
