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MORT > U5: T19 - PROTECTION ADVICE > Flashcards

U5: T19 - PROTECTION ADVICE Flashcards

1
Q

The rules for providing advice and sales of ‘pure protection’ vehicles are contained?

A

Insurance: Conduct of Business sourcebook (ICOBS):

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2
Q

Define ‘Pure Protection’.

A

A pure protection product provides protection against one or more perils but does not contain an investment element.

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3
Q

Is ‘Whole of Life’ assurance a form of pure protection?

A

No, because whole-of-life is investment linked

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4
Q

Define Utmost Good Faith

A

Utmost good faith required both applicant and insurer to disclose accurately, honestly and completely any information (ie material facts) that might influence the other party’s decision to enter into the contract.

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5
Q

Why did the Consumer Insurance Disclosure and Representations Act 2012 remove the ‘Utmost Good Faith’ principle?

A

This put too much onus on the consumer to disclose factors they may not have realised were relevant.

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6
Q

The Insurance Act 2015 covers consumers or non-consumers?

A

Non-consumers.

Similar to the consumer insurance act 2012 - it covers insurance contracts for business purposes.

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7
Q

In the instance of claims due to reckless and deliberate misrepresentation what happens to:

1) The contract
2) The claim
3) The premiums

A

1) Treat the contract as if it never existed
2) Refuse all claims
3) Retain all premiums paid, unless this would be unfair

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8
Q

In the instance of claims due to careless misrepresentation what happens to:

1) The contract
2) The claim
3) The premiums

A

If the insurer would NOT have entered into the contract if it knew the information, all claims can be refused but premiums must be returned

If the insurer WOULD have entered into the contract on different terms (eg at a lower level of cover) the different terms are taken as applying to the contract

If a higher premium would have been charged, the insurer can make a proportionate reduction to the amount of any claim

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9
Q

In the instance of claims due to honest and reasonable misrepresentation what happens to:

1) The contract
2) The claim
3) The premiums

A

None: the insurer must pay any claim

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10
Q

For a pure protection policy, what can be provided in stead of a Key Features Document (KFD)?

A

Policy Summary

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11
Q

Which of the following have a cooling off period of 14 days?

A) Life Assurance
B) Home Insurance
C) CIC
D) IPI

A

B) Home Insurance

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12
Q

Which of the following have a cooling off period of 30 days?

A) Life Assurance
B) Home Insurance
C) CIC
D) IPI

A

A) Life Assurance
C) CIC
D) IPI

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13
Q

If the same level and terms of cover can now be obtained at a reduced cost, is it acceptable to recommend a cancellation and replacement of an existing policy?

A

Yes, if it can be shown conclusively

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14
Q

If a more appropriate plan (possibly with better cover) can be obtained at a similar cost, is it acceptable to recommend a cancellation and replacement of an existing policy?

A

Yes, if it can be shown conclusively

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15
Q

Which of the following will allow debt repayment?

A) CIC
B) IPI

A

A) CIC

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16
Q

Which of the following will service debt?

A) CIC
B) IPI

A

B) IPI

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17
Q

A joint-life plan is cheaper than two single-life plans. True or false

A

True

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18
Q

Protection is cheaper the shorter the term of the plan. True or false

A

True

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19
Q

Decreasing term assurance is cheaper than level term assurance. True or false

A

True

20
Q

CIC can be arranged as an added benefit within a term assurance. True or false

A

True

21
Q

CIC cannot be arranged on a joint-life basis. True or false

A

False.

CIC can be arranged on a joint-life basis.

22
Q

True or false: Universal whole-of-life plans meet a variety of protection needs within one plan. They are flexible enough to be adjusted in the future.

A

True

23
Q

What must normally elapse between the insured event happening and the commencement of WoP?

A

A deferred period during which nothing is payable.

24
Q

What section of ICOB refers to product suitability?

A

ICOBS 5 states that firms must take reasonable steps to ensure the suitability of advice to any customer who is entitled to rely on their judgement.

25
Q

The duty to give a customer appropriate information to make an informed choice about a policy is covered in which part of ICOBS?

A

ICOBS 6 covers the duty to give a customer appropriate information to make an informed choice.

26
Q

Whole-of-life assurance is a pure protection product. True or false?

A

False. Pure protection products contain no investment element.

27
Q

When determining a person’s budget for protection, the adviser should use as a maximum:

a) a proportion of the person’s current disposable income.
b) a proportion of the person’s future disposable income.
c) all of the person’s current disposable income.

A

a) a proportion of the person’s current disposable income.

28
Q

Which whole-of-life plans meet a variety of protection needs within one plan?

a) Joint life.
b) Mortgage-related.
c) Universal.

A

c) Universal.

29
Q

If a couple separates and the parties want to sever all financial ties, a joint-life policy is still appropriate. True or false?

A

False

30
Q

Under ICOBS 5 suitability requirements, a firm must inform the customer if it finds that:

a) they have made a misrepresentation.
b) documents have been provided in a durable medium.
c) parts of the cover do not apply.

A

c) parts of the cover do not apply.

31
Q

Which remedy may be available to the insurer if a customer makes a careless misrepresentation?

a) Refuse all claims but return the premiums.
b) None: the insurer must pay any claim.
c) Treat the contract as if it never existed.

A

a) Refuse all claims but return the premiums.

32
Q

Consumers’ main duty of disclosure when entering into, or renewing, an insurance contract is:

a) utmost good faith.
b) fair representation.
c) disclosure of all material facts.

A

b) fair representation.

33
Q

Which section of ICOBS states that firms must take reasonable steps to ensure the suitability of advice to any customer who is entitled to rely on their judgement?

A

ICOB 5

34
Q

If some savings are reallocated to meet costs arising on death or illness, the client may wish to make additional protection provision. True or false?

A

True

35
Q

Which piece of documentation is normally issued when the recommendations are presented to the customer?

a) Acceptance letter.
b) KFD.
c) Cancellation notice.

A

b) KFD.

36
Q

Relevant CPD can contribute to the FCA’s training requirements under ICOBS. True or false?

A

True.

All those involved in the distribution of insurance products possess appropriate knowledge and ability to perform their duties. As part of this, individuals complete a certain amount of relevant CPD per year.

37
Q

The duty to take reasonable care not to make a misrepresentation is known as:

A) utmost good faith.
B) material facts.
C) fair representation.

A

C) fair representation

Fair representation in insurance replaced the duty for consumers to disclose all material facts.

38
Q

A protection applicant makes a statement they think is true, but they do not check. The statement proves to be false. Which type of misrepresentation is this?

A) Reckless misrepresentation.
B) Careless misrepresentation.
C) Deliberate misrepresentation.

A

B) Careless misrepresentation.

Careless misrepresentation is where the consumer makes a statement they believe to be true but without sufficient care to check the facts.

39
Q

The cooling-off period for life assurance, CIC or IPI is generally:

A) 14 days.
B) 20 days.
C) 30 days.

A

C) 30 days.

The cooling-off period is generally 30 days for life assurance, CIC or IPI, and 14 days for home insurance.

40
Q

Existing cover should be cancelled before the replacement cover is in force. True or false?

A

False.

Existing cover should never be cancelled until the replacement cover is in force – to cancel before confirmation could expose the customer to risk.

41
Q

When assessing an income protection need, the calculation might involve multiplying the additional annual income required by a factor such as the:

A) number of years until the youngest child reaches the age of 18 or 21.
B) number of years until the youngest child reaches the age of 13.
C) number of years until the oldest child reaches the age of 18 or 21.

A

A) number of years until the youngest child reaches the age of 18 or 21.

The factor should take into account for how long the income will be required.

42
Q

Which of the following is likely to help lower the costs of protection for a couple?

A) Adding mortgage cover to an existing protection policy.
B) Arranging a joint-life plan instead of two single-life plans.
C) Extending the term of the desired cover.

A

B) Arranging a joint-life plan instead of two single-life plans.

A joint-life plan is cheaper than two single-life plans.

43
Q

What is an important feature to ensure financial protection continues in times of need?

A) Waiver of premium.
B) Separation benefit.
C) Indexation.

A

A) Waiver of premium.

If the client is eligible and the cost is affordable, WoP should be recommended whenever it is available.

44
Q

Cancellation is covered under which section of ICOBS?

A) ICOBS 5.
B) ICOBS 6.
C) ICOBS 7.

A

c) ICOBS 7

For most insurance contracts, under ICOBS 7 there is a short cooling-off period during which the customer can cancel without penalty.

45
Q

What helps to ensure that protection recommendations continue to meet the client’s needs?

A) Irregular reviews.
B) Regular reviews.
C) A thorough fact find before cover starts.

A

B) Regular reviews.

After the solutions are in place, it is necessary to conduct regular reviews to ensure the recommendations continue to meet the client’s needs.

MORT (30 decks)

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