Chapter 2- Financial Protection Needs Flashcards
What are the 5 areas of need for protection?
- Health, incapacity, accident
- Income, mortgage and other debt
- Death
- Asset protection
- Business protection
Can redundancy be insured?
It is very difficult to insure - usually for 2 years max.
What is the nil-rate band for IHT?
£325,000
What is the additional main residence nil rate band in relation to IHT?
£175,000
How does divorce affect insurance policies?
Prompt a review of protection needs.
The divorce does not alter a person’s interest in a policy unless the court orders otherwise.
What do some insurers offer to divorced couples to save the need to get new policies which maybe less beneficial?
Policy splitting, which negates the need for further underwriting.
List all the main types of protection:
- Life Assurance
- Income Protection (IP)
- Critical Illness Cover (CIC)
- Long-term Care Insurance (LTCI)
- Payment Protection Insurance (PPI)
- Personal Accident and Sickness Insurance (PAS)
- Accident, Sickness and Unemployment Insurance (ASU)
- Private Medical Insurance (PMI)
- Health Cash Plans
How does IHT impact estates with net value above £2m?
The additional nil-rate band is withdrawn at £1 for every £2 over £2m.
What is the rate of tax for IHT?
Nothing if passing onto a spouse/partner, otherwise 40% of the excess.
The FCA require what of advisers when determining whether insurance is needed?
‘Know your Customer’ or standard fact-find to cover assets and liabilities and any dependants.
What employee benefits might an employer offer?
- Sick Pay/Income Replacement
- Life Cover (death-in-service)
- Critical Illness Cover
- Pension Arrangements
- Private Medical Insurance
What is ‘free cover’?
The amount of Insured benefit allowed without the need for underwriting, provided all eligible employees join the scheme.
Death-in service pay out is often set at?
4 x Salary
For people with dependants this will not be enough.
