Unit 5 - Topic 17 Flashcards
Types of financial protection 1
Which one of the following State benefits is Universal Credit not designed to replace ? (17.1.1)
A. Pension Credit
B. Working Tax Credit
C. Income Support
D. Child Tax Credit
A. Pension Credit
Pension Credit is not to be replaced by Universal Credit.
For what period is Statutory Sick Pay payable ? (17.1.2)
A. 12 weeks
B. 18 weeks
C. 28 weeks
D. 52 weeks
C. 28 weeks
Statutory Sick Pay is paid by employers to employees who are off work owing to sickness
or disability for four consecutive days or longer. SSP is paid for up to a maximum of 28
weeks in any spell of sickness
With a Support for Mortgage Interest (SMI) loan, for those not receiving Pension Credit, the benefit is paid to cover interest on : (17.1.4)
A. a mortgage of up to £200,000
B. a mortgage, plus arrears of up to £200,000
C. a mortgage, plus insurance premiums of up to £100,000
D. a mortgage of up to £100,000
A. a mortgage of up to £200,000
SMI is paid to cover interest (not capital) on the first £200,000 of a mortgage, but claimants receiving Pension Credit are generally only covered for interest on the first £100,000
Which of the following statements regarding Support for Mortgage Interest is correct ? (17.1.4)
A. With the exception of those claiming Pension Credit, the waiting period between making a claim and payments starting, is 39 weeks.
B. The SMI loan is secured by a first charge on the property.
C. Where the property is transferred to the claimant’s partner on death, the loan must be repaid.
D. SMI payments are made direct to the homeowner.
A. With the exception of those claiming Pension Credit, the waiting period between making a claim and payments starting, is 39 weeks.
Following a claim, the waiting period that must elapse before payment commences is 9 consecutive Universal Credit payments, or 39 weeks after claiming for another qualifying benefit, but pensioners receiving Pension
Credit have no waiting period
John has been receiving Support Mortgage Interest (SMI) for the past year, but is due to start a permanent job. He is entitled to claim ‘interest run-on’, which means his benefit
can still be paid for a further: (17.1.4)
A. 12 months
B. 3 months
C. 6 months
D. 4 weeks
D. 4 weeks
John has been receiving SMI support for more than 26 weeks, but is now about start a
permanent job. He is entitled to claim mortgage interest ‘run-on’ for a further four weeks ; this payment is made to him, rather than the lender.
David and Victoria have recently applied for a repayment mortgage. Which type of life assurance protection is most likely to be suitable for them? (17.2.3)
A. Endowment
B. Whole of life
C. Level term
D. Mortgage protection
D. Mortgage protection
The most common use of decreasing term assurance is to cover the amount outstanding on a repayment mortgage, via mortgage protection assurance. The sum assured is calculated so that, as long as premiums are maintained, it is always equal to the amount outstanding on a repayment mortgage of the same term, based on a specified interest rate.
Peter is considering taking out a convertible term assurance
policy to protect his mortgage in the event of his death. Why might he choose to do this? (17.2.1)
A. He wants to increase the death benefit on the policy when he moves house in three years’ time.
B. If he marries in the future, he wants to be able to add his wife to the policy.
C. He is currently in poor health and wants to be able to increase the cover on the plan when he gets better.
D. His income is currently stretched, so he wishes to pay lower premiums now and then change the policy to provide more comprehensive cover in 5 years’ time.
D. His income is currently stretched, so he wishes to pay lower premiums now and then change the policy to provide more comprehensive cover in 5 years’ time.
With life or term assurance policies, cover may be excluded in some situations. Which of the following would the insurer not exclude the applicant from cover? The applicant :(17.2.3)
A. has a high-risk lifestyle
B. has risky hobbies
C. travels regularly for business on commercial airlines
D. has serious health issues
C. travels regularly for business on commercial airlines
Business travel on commercial airlines would not usually be treated by the underwriters
as a reason for life assurance exclusion.
Which of the following statements regarding income protection and critical Illness policies is true ? (17.5)
A. Critical illness cover provides a taxable lump sum on diagnosis of a specified illness
B. Critical illness policies always provide lump sum and income benefits
C. There is no limit to the level of benefit that can be arranged under an income protection policy
D. There is no limit to the number of claims that can be made on an income protection policy, provided premiums are up-to-date.
D. There is no limit to the number of claims that can be made on an income protection policy, provided premiums are up-to-date.
Not A = Critical illness cover pays tax-free benefits
Not B = Critical illness policies pay a lump sum benefit
Not C = Traditionally, companies offer benefits set as a proportion of earnings (typically
50–80 per cent, though higher levels are available)
In its ‘Guide To Minimum Standards for Critical Illness Cover’, details of which of the following did the Association of British Insurers remove in 2018? (17.5.1)
A. self-inflicted injury
B. content about those living with HIV
C. kidney failure
D. permanent loss of speech
B. content about those living with HIV
In 2018, The ABI removed discriminatory wording from its CIC minimum standards about those living with HIV.
With Income Protection Insurance, benefits are payable after the expiry of a deferred period, which tends to be for at least: (17.4.2)
A. 4 weeks
B. 13 weeks
C. 26 Weeks
D. 52 weeks
A. 4 weeks
Benefits are payable after the expiry of a deferred period, which for IPI tends to be at least four weeks.
Which of the following benefits is not means-tested? (17.1.2)
A. Universal Credit
B. Child Benefit
C. Pension Credit
D. Attendance Allowance
D. Attendance Allowance
Attendance Allowance is not a means-tested benefit, nor is it taxable. It’s a benefit for those over State pension age who need help with personal care or supervision because of an illness or disability.
A successful claim under a Critical Illness policy will normally lead to which type of payment (17.3)
A. A lump sum and income payment to the insured
B. Income payment to the insured and a surviving dependant’s payment
C. Income payment to the insured only
D. A lump sum
D. A lump sum
CIC provides a lump-sum payment on diagnosis of one of a specified range of life-threateningor debilitating illnesses or medical conditions. Some providers also offer policies that can pay an income, but this actually involves paying the lump sum in instalments.
