Chapter 1

Question 1

What is the most common way to categorise risk?

Answer 1

• the severity of the possible impact and the likelihood it will occur

Question 2

How has social behaviour changed since WW2 which may affect protection planning?

Answer 2

• lives have become less predictable

- increased life events spanning a wide age range

Question 3

Why do insurers need to be aware of changing social patterns?

Answer 3

Consumers need greater flexibility with more options covering a wider range of risks.

Question 4

What does the life insurance gap signify?

Answer 4

-the shortfall in the amount of cover required to maintain the standard of living of dependents

Question 5

How can insurers affect public attitudes to taking out protection insurance?

Answer 5

-advertising, marketing, day to day conversations with consumers, website,

Question 6

How does the ‘welfare state’ hinder or help the sale of protection?

Answer 6

• some may think protection is not needed as the ‘state will look after you’
• gaps in protection will provide opportunity for sales

Question 7

Which factors impact on sales of mortality protection?

Answer 7

• dependants
• affordability
• the housing market
• income per capita

Question 8

What is preferred life insurance?

Answer 8

• a product which segments lives according to healthy or lifestyle characteristics

Question 9

Does preferred life occur in any context in the UK market?

Answer 9

-not explicitly, but it is inadvertently emerging through the underwriting process

Question 10

How can online portals lead to the commoditisation of term life insurance?

Answer 10

–because of their exclusive focus on price