Chapter 7: Life Insurance products Flashcards
Describe the benefit payable with:
Decreasing term assurance
Lump sum benefit on death within a specified term.
The lump sum decreases the later the death occurs.
Alternatively the benefit may be a level income paid from the date at which the death occurs, payable to a dependent.
Describe the benefit payable with:
Convertible term assurance
Lump sum benefit on death within a specified term, with the option to convert to a whole life or endowment at the end of the term.
Describe the benefit payable with:
Critical illness cover
Lump sum on the diagnosis of a critical illness.
Describe the benefit payable with:
Long-term care
Lump sum, an annuity, or some or all of the actual cost of care.
Describe the benefit payable with:
Income protection cover
A regular income during period when the insured is unable to work due to accident or illness.
A policy may also pay out in other circumstances, e.g. unemployment.
Describe the benefit payable with:
Endowment assurance
A lump sum on survival to the end of the term or on death before the end of the term.
Describe the benefit payable with:
Deferred annuity
A regular income payable from a vesting date.
It may be possible to take a proportion of the benefit as a lump sum on the vesting date.
Describe the customer needs met by:
whole life assurance
- funeral expenses
- inheritance tax
- death duties
- protection to dependents
Describe the customer needs met by:
Decreasing term assurance
- loan repayment
- family income benefit
Describe the customer needs met by:
Renewable term assurance
- cheap death cover with the certainty of being able to renew the contract for a further period without health evidence being provided.
Describe the customer needs met by:
Critical illness cover
Financial security in the event of contracting a critical illness.
The money could be used to provide nursing or other care.
Describe the customer needs met by:
Long-term care cover
Financial security against the risk of needing home or nursing home care as an elderly person.
Describe the customer needs met by:
Immediate annuity
Protection against longevity or to pay regular school fees.
Often used to secure a retirement. As an alternative an individual could purchase an income drawdown product. Under this arrangement, funds would remain invested and the member would withdraw an amount of the funds each year.
Describe the customer needs met by:
Deferred annuity
A savings vehicle, e.g. for retirement.
If some of the benefit can be taken as a lump sum, it could be used to pay off a loan.
Does a group version exist for:
Whole life assurance
No, an employer would only provide employees for death cover up to the point of retirement.
