Unit 5:19 Protection Advice

Question 1

ICOBS (Insurance: Conduct of Business Sourcebook)

Answer 1

• Authorization: Any firm giving advice on these products needs thumbs-up from the Financial Conduct Authority (FCA)
• Training: Everyone providing advice must maintain relevant training and qualifications
• Suitability: Advice should fit like a glove, ensuring recommendations match customer’s needs and situation, including existing coverage

Question 2

Core Protection Advice Resources

Answer 2

• Comparison Sites: Tools for evaluating insurance options
• Free Advice Resources: Citizens Advice and MoneyHelper provide impartial guidance
• Duty of Disclosure: Consumer Insurance Act 2012 requires transparency with insurers, preventing claim rejection based on undisclosed information

Question 3

Insurance Act 2015 and Good Faith

Answer 3

• Insurance Act 2015 replaced previous requirement for “utmost good faith” with consumer protection
• Consumers now protected when making insurance applications if not deliberately withholding information
• Applies to personal insurance products including life assurance, income protection

Question 4

Insurance Misrepresentation Remedies

Answer 4

• Deliberate or reckless misrepresentation: Contract treated as if never existed, all claims refused, premiums returned unless would be unfair
• Careless misrepresentation: Claims may be refused but premiums returned, or contract terms adjusted proportionately (e.g., lower coverage level)
• Honest and reasonable misrepresentation: Insurer must pay claim as contracted

Question 5

Essential Insurance Documents

Answer 5

1. Key Features Document: Guidebook outlining important policy details including coverage and exclusions
2. Acceptance Letter: Communication from insurer confirming policy details and terms; may include different terms if health issues discovered
3. Cancellation Notice: Document explaining how to cancel a policy if needed, with instructions for proper termination
4. Policy Document: Comprehensive “insurance bible” containing all details about the plan; should be kept safely for reference when making claims

Question 6

30 Days Cancellation Times

Answer 6

• Life Insurance
• Critical Illness
• Income Protection
  Time starts when you receive your document

Question 7

Protection Needs Assessment Process

Answer 7

• Assessing Income Needs: Evaluation of financial requirements in case of death
• Income Protection Solutions: Options to replace income if unable to work
• Assessing Capital Needs: Determination of lump sum requirements for dependents
• Finding the Right Solution: Tailored recommendations based on individual circumstances

Question 8

Additional Planning Considerations

Answer 8

• Savings/Investments: Existing savings may form part of protection solution; clients may need additional provisions to maintain original savings goals if funds are reallocated for protection costs
• Relationship Breakdown: Joint-life plans require re-evaluation, possibly replacing with single-life plans
• Employer Benefits: Loss of workplace protection (pension, sick pay, medical cover) may require additional personal arrangements

Question 9

Suitability Report

Answer 9

• Client must be handed a suitability report
• Within 5 days