4: Life Assurance Pt. 3 Flashcards
(40 cards)
Trustees can freely resign, but what’s the procedure if a settlor wants to forcibly remove a trustee?
An application to a court (with considerable costs and uncertainties!)
What policies can be written in trust? (3)
Existing life assurance, new policy, any life assurance written as part of a pension scheme.
What is the main purpose of registering a trust on the Trust Registration Service (TRS)?
Expanding transparency in trust management, a single platform for the trust to be managed easily
Trustees of a life policy trust decide to surrender the policy, meaning the cash proceeds remain in the trust. Does the trust need registering on the Trust Registration Service (TRS)?
Yes, because the surrender funds are treated as an asset that does not qualify for the life policy exemption.
A trust contains an investment bond, and trustees decide to take regular withdrawals from the bond for a beneficiary. Does the trust need registering on the Trust Registration Service (TRS)?
Because HMRC treats bond withdrawals as payouts, the trust must register, as it now holds assets that do not meet the life policy exemptions.
A life policy trust pays out due to the settlor suffering a critical illness. In what circumstances does the trust need registering on the Trust Registration Service (TRS)?
If the trustees receive the funds first, the trust must register. To avoid registration, the trustees should arrange for the payout to go directly to the beneficiary, rather than through the trust.
A life assurance policy pays out after the death of the life assured, but the trustees delay distribution beyond two years. Does the trust need registering on the Trust Registration Service (TRS)?
After two years, the trust must register under TRS, as the funds are now considered an asset held within the trust.
A trust was set up for a life policy, but it also holds other assets, such as shares or property. Does the trust need registering on the Trust Registration Service (TRS)?
The trust must register, as assets unrelated to life policies do not qualify for exemption under TRS rules.
Name 4 types of policies that do no need registering on the Trust Registration Service (TRS), and under what conditions?
Death of the life assured – if the policy solely pays out upon the death of the insured person.
Terminal or critical illness - if the policy pays benefits due to a diagnosis of a terminal or critical illness, directly to the policy holder
Permanent or temporary disablement - where the policy provides coverage for disability of the insured person, directly to the insured person
Healthcare coverage – policies structured to pay for medical treatment of the life assured.
A trust must register on the Trust Registration Service (TRS) if it holds a policy has which 4 non-exemptions?
- A surrender value and trustees surrender it, leaving cash assets within the trust.
- Includes bonds or investment-linked components, which may trigger tax liabilities.
- Holds non-insurance assets, like property or shares, alongside life policies.
- Pays out due to critical illness or disability but does not pay directly to the beneficiary - if trustees receive the funds first, the trust must register.
What is a moratorium in insurance?
An underwriting style.
A waiting period before pre-existing medical conditions can be covered.
No full medical disclosure is required at policy outset.
Conditions are excluded for 2 years or so unless the insured has no treatment during that time.
What is the purpose of a moratorium in insurance?
Quick approval and risk management.
What is the difference between moratorium underwriting and full medical underwriting?
Moratorium underwriting automatically excludes pre-existing conditions without requiring full medical disclosure upfront.
Full medical underwriting involves a detailed health assessment before the insurer sets terms.
How long do pre-existing conditions remain excluded in moratorium underwriting?
Typically two years, but if treatment or check-ups occur, the exclusion restarts for another two years after that.
How can pre-existing conditions become eligible for coverage under a moratorium?
If the insured does not require treatment or symptoms for the condition during the moratorium period, coverage may apply after it ends.
What is Continuing Personal Medical Exclusions (CPME) in insurance?
A method where an insurer adopts pre-existing exclusions from a previous insurer, allowing a seamless transfer of coverage.
Why do insurers use Continuing Personal Medical Exclusions (CPME)?
Allows individuals to switch insurers without undergoing full new underwriting.
Maintains previous exclusions, ensuring continuity of coverage.
Encourages competition by making it easier to transfer policies.
What is a Paramedical in underwriting evidence?
Short medical questionnaire plus basic tests (such as measuring
height, weight and blood pressure, usually undertaken by a nurse)
What is a Health Screening in underwriting evidence?
Non-invasive tests such as saliva swabs, hair samples and urine tests.
What is tele-underwriting?
Tele-underwriting is a process that speeds up insurance underwriting by reducing paperwork and conducting assessments over the phone.
What are the 2 types of tele-underwriting?
Big T Tele-Underwriting
- minimal Qs on the phone
- asks customised Qs based on your answers
- faster than filling in forms
Little t Tele-Underwriting
- majority of Qs on application form
- phone interview only used for supplementary Qs
Who does the UK General Data Protection Regulation (UK GDPR) legislation apply to?
Persons in the UK who process personal data other than for domestic purposes.
What information does the UK General Data Protection Regulation (UK GDPR) legislation apply to?
Personal data
Name up to 8 examples of sensitive personal data.
- race or ethnic origin;
- political opinions;
- religious or philosophical beliefs;
- trade union membership;
- genetic data;
- biometrics (where used for ID purposes);
- health information;
- information about sex life; and
- sexual orientation.
