U5: T18 - TYPES OF FINANCIAL PROTECTION II Flashcards
Which of the following standard perils are specific to contents insurance?
a) Damage by storm and flood.
b) Damage or losses caused by theft and attempted theft.
c) Damage to computers and TVs.
d) Damage caused due to frozen or burst pipes.
e) Damage caused by impact from falling trees.
f) Replacement of locks and keys.
g) Theft of the insured’s money from another building.
h) Subsidence, landslip and heave.
c) Damage to computers and TVs.
f) Replacement of locks and keys.
g) Theft of the insured’s money from another building.
Damage caused by escape of water or oil is excluded from buildings insurance when the property is:
a) furnished.
b) unfurnished.
c) self-build.
b) unfurnished.
If a mortgage borrower fails to maintain their buildings insurance premiums, the lender may:
a) repossess the mortgaged property.
b) choose to pay the outstanding premiums and add the payments to the mortgage loan.
c) choose to pay the outstanding premiums and charge the borrower a specified interest rate.
b) choose to pay the outstanding premiums and add the payments to the mortgage loan.
Landlord’s contents insurance will cover:
a) the landlord’s contents only.
b) both the landlord’s and the tenant’s contents.
c) the tenant’s contents only.
a) the landlord’s contents only.
ASU can work in conjunction with IPI. True or false?
True
An ASU redundancy claim is likely to be excluded if the applicant had:
a) no reason to expect the redundancy when they took out the policy.
b) previously been made redundant from a job unrelated to the claim.
c) reason to believe the redundancy was imminent when they took out the policy.
c) reason to believe the redundancy was imminent when they took out the policy.
An ASU redundancy claim is likely to be excluded if the applicant had reason to believe the redundancy was imminent when they took out the policy.
If PPI is arranged on a joint basis to protect both mortgage borrowers, the premium will be:
a) the same as that quoted to protect one borrower.
b) double the amount quoted to protect one borrower.
c) variable depending on the second borrower’s health.
b) double the amount quoted to protect one borrower.
When using WoP, if the underlying plan is on a joint-life basis the WoP is always available to both of the lives assured. True or false?
False
Which rider benefit splits a joint life or CIC policy into two single policies if the need is evidenced?
a) Separation benefit.
b) Replacement benefit.
c) Life changes benefit.
a) Separation benefit.
MPPI usually allows:
a) one claim to be made.
b) more than one claim to be made.
b) more than one claim to be made.
WoP typically does what to the premiums from the offset?
A) Increases then by 2-4%
B) Increases them by 4-6%
C) Decreases them
B) Increases them by 4-6%
Does a WoP insurance claim have a deferred period?
Yes, typically of 1 month.
Is MPPI subject to a deferred period?
Typically yes
Terminal illness cover typically insures people with how long left to live?
A) 6 months
B) 12 months
C) 2 years
B) 12 months
Accidental death benefit pays out a multiple of the sum assured in the event of death by accident. True or false?
True
How many forms of model wording does the ABI provide for defining a total and permanent disability?
The ABI provides four model wording definitions for total and permanent disability.
What is Separation benefit?
Splits a joint life or CIC when a couple separate. Evidence of the separation must be provided
What is replacement benefit?
For a joint life policy, the policy ends in the event of one of the policyholders dying. With a replacement benefit, the remaining policyholder can start a new single policy without further underwriting.
Buildings insurance is mandatory for mortgaged homes. True or false?
True. Lenders insist that a mortgaged property is adequately insured against damage or destruction.
Can you remember at what point in the buying process the buyer should arrange for buildings cover to start?
Buildings cover should be arranged by the buyer from the date on which contracts are exchanged – the buyer is theoretically responsible for the building from that date.
A property has an insurance reinstatement valuation of £180,000 but it is actually insured for £150,000. If a claim for £15,000 is submitted and a standard excess clause of £500 applies, how much will the insurer pay?
(150,000 x 15,000) ÷ 180,000 = £12,500 less the excess = £12,000.
Does the borrower have to arrange insurance through the lender?
No. The borrower does not have to arrange insurance with their lender; they have the right to choose their own insurer from the wider marketplace. However, the lender has the right to insist that the borrower’s proposed policy meets its minimum requirements and is with a reputable insurer. As a minimum, this will mean the insurer should be an ABI member.
IPI is less expensive than ASU. True or false?
False.
ASU is relatively inexpensive compared to IPI, because it is not underwritten on a personal basis and will pay income benefits for a shorter period (typically 12 months but can be up to 2 years).
Can an insurer withdraw IPI cover based on claims experience?
No, the insurer cannot withdraw IPI cover based on claims experience. This is a major difference between ASU and IPI: the latter provides permanent cover.
