Unit 5:16 Financial Protection

Question 1

Protection Needs & Priorities

Answer 1

• Income and capital protection needs [safeguarding against financial vulnerabilities]
• Consequences of underinsurance [inability to pay debts, manage extra costs]
• Protection priorities vary by circumstances [life stage, dependants, existing cover]
• Benefits include: debt clearance, funding healthcare, maintaining lifestyle, preserving family assets

Question 2

Reasons for Underinsurance

Answer 2

• “Not me” mindset [denial of personal risk exposure]
• Misjudging needs [underestimating actual financial requirements]
• “Can’t afford it” misconception [prioritising immediate costs over long-term protection]
• Trusting the state [overreliance on public benefits]
• Avoiding unpleasant discussions [reluctance to address mortality and incapacity]

Question 3

Biggest Problem with Comparison sites for Life Insurance

Answer 3

• Not bespoke to personal needs

Question 4

Protection Priorities by Life Stage

Answer 4

• Young, Single Adventurer [income protection, critical illness cover for single earner]
• Young Lovebirds Without Nestlings [mortgage protection, joint life policy considerations]
• Young Parents Amidst Chaos [family income benefit, life insurance, education planning]
• Middle-Aged [pension planning, inheritance tax considerations]
• Retirement [long-term care provision, estate planning, funeral cover]

Question 5

Financial Need Ranking

Answer 5

• Safeguarding Dependents [highest priority, protecting those reliant on income]
• Weathering Long-Term Income Loss [income protection for illness/disability situations]
• Harmonising Retirement Planning [ensuring adequate pension provision]
• Amplifying Savings and Investments [wealth building after essential protection in place]