Unit 5 – Topic 18 & 19 Flashcards
Types of financial protection 2 & Protection Advice
Keith, a self-employed hairdresser, has chosen the waiver of premium option with his mortgage protection policy. This option is designed to provide protection of the policy benefits in the event of: (18.1)
A. death
B. ill health
C. repossession
D. unemployment
B. ill health
Providers often offer waiver of premium (WoP) as an option on most types of protection policy. WoP is designed to ensure that policy payments are maintained and benefits preserved if the insured is unable to work owing to accident, illness or disability
With buildings insurance cover, the lender has the right to do all of the following, except : (18.3.1)
A. specify the insurance company the borrower must use.
B. have its interest noted by the insurer
C. ensure claim money is used to remedy the cause of the claim
D. insist that the property is insured
A. specify the insurance company the borrower must use.
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.
With most buildings insurance policies, which of the following would not be covered as a ‘standard peril’. (18.3.1)
A. Theft and attempted theft
B. Storm and flood
C. Vandalism
D. Damage caused by falling trees to fences
D. Damage caused by falling trees to fences
Damage caused to gates, fences and hedges by falling trees, is one of four standard exclusions
With Mortgage Payment Protection Insurance (MPPI), the benefit is usually payable after a deferred period of : (18.4.3)
A. 28-30 days
B. 16 weeks
C. 28 weeks
D. 52 weeks
A. 28-30 days
Benefit is payable after a deferred period, usually 28–30 days, and for a maximum period of up to 2 years, depending on the policy terms.
Accident Sickness and Unemployment (ASU) policies can provide which of the following (18.4.1)
A. Income benefits are payable after a deferred period
B. A lump sum after a deferred period
C. A regular income for an unlimited period
D. A tax-free lump sum on diagnosis of a life-threatening illness
A. Income benefits are payable after a deferred period
Income benefits are payable after a deferred period, typically one month, for a maximum specified period, typically one or two years
Which of the following would not be considered a ‘pure protection’ product ? (19.1)
A. Mortgage Payment Protection Insurance
B. Whole Life Assurance
C. Critical Illness Cover
D. Term insurance
B. Whole Life Assurance
Whole life assurance is not a pure protection product, because it can contain an investment element and is therefore not regulated under ICOBS
Jack is completing the proposal form for the term insurance he is hoping to take out. Which of the following describes how he must answer the questions ? (19.2.1)
A. By volunteering all material facts
B. By taking reasonable care not to make any misrepresentation
C. By following the principle of ‘utmost good faith’
D. By following the principle of ‘caveat emptor’
B. By taking reasonable care not to make any misrepresentation
The Consumer Insurance (Disclosure and Representations) Act 2012 replaced the duty for consumers to disclose all material facts, with a duty to take reasonable care not to make a misrepresentation, known as fair
representation.
Which of the following products wouldn’t be regulated under ICOBS ? (19.1)
A. Buildings and contents insurance
B. Critical Illness Cover
C. Accident, Sickness and Unemployment (ASU)
D. Personal Pensions
D. Personal Pensions
Personal pensions are not general insurance products and therefore aren’t regulated
under ICOBS
For most insurance contracts, under ICOBS 7 there is a short cooling-off period during which the customer can cancel without penalty. Which of the following has a 14-day cooling-off period ? (19.2.2)
A. Home insurance
B. Critical illness cover
C. Income protection insurance
D. Term insurance
A. Home insurance
For most insurance contracts, under ICOBS 7: Cancellation there is a short cooling-off period during which the customer can cancel without penalty. This is generally 30 days for life
assurance, CIC or IPI, and 14 days for home insurance
