2 Financial protection needs Flashcards
(18 cards)
What is a health cash plan?
Provides small lump sum benefits for a number of medical treatments or on a per day basis for hospital stays
How are plans which combine different types of cover in to one plan commonly called?
Menu plans
Name 3 of the main areas of need for protection
- health, incapacity or accident;
- income, mortgage and other debt;
- death;
- asset protection; and
- business protection
For Health, incapacity or accident needs, what types of protection products would be suitable?
Income protetion
Critical illness
Accident, Sickness & unemployment
Private Medical Insurance
Long Term Care
why should someone who has an active enduring POA for another person consider taking out protection?
If they can’t for themselves then responsibility may be passed to a guardian/ deputy who are appointed by court of protection, need to insure against these potential costs
How much is the dedicated main residence nil rate band & can couple combine it?
£175k, yes they can
Why would someone need to take out protection for asset protection purposes?
If an individual dies then there could be an IHT bill for the beneficiaries, protection can help with these costs
When could an IHT charge occur with regards to asset protection?
Death estste - IHT charge if someone dies with an estate over nil rate band
Potentially exempt transfers - IHT charge if donor dies within 7 years
Chargeable Lifetime Transfers - Lifetime gifts over the nil rate band, then IHT charge incurred
With the main residence nil rate band, what is the maxiumum estate value between a couple that can not be subject to IHT?
£1m
When is a Potentially exemp transfer deemed to have failed?
When the donor dies within 7 years
what happens when a Potentially exemp transfer deemed to have failed?
Gift goes back to estate of donor and can result in IHT charge
Why would businesses take out protection for key people?
Most businesses success depends on a few individuals
Why should divorce prompt a review of a person’s ecxisting protection?
Divorce should prompt a review of protection cover as it may have an effect on existing cover and future needs
What happoens to a person’s interest on a policy on divorce and what can the consequences of this be?
The divorce itself does not alter a
person’s interest in a policy.
So, if an ex-spouse is a policyholder, life assured, trustee or beneficiary, this will continue unless the court orders otherwise
Why should an adviser consider the client’s assets when it comes to reccomending protection?
If their income could stop and they don’t have liquid assets
What are the two main sources of protection?
state protection
employee benefits
Give 1 advantage and 1 disadvantage of using employee benefits as protection?
Advantage
- Employers bear the cost
- Employer schemes can negotiate better rates for more people
Disadvantage
- Sometimes doesn’t provide enough
- Ceases on end of employment
John died leaving an estate of £500,000, which does not include a residential property. He left £200,000 to his civil partner, James, and the remainder to his nephew. How much inheritance tax, if any, is payable on John’s estate?
a.
£100,000.
b.
£70,000.
c.
Nil.
d.
£120,000
C - Nil
