Knowledge Gaps - Health Insurance Flashcards
(52 cards)
Why would an income policy (IP)usually pay out and how frequently?
If someone is too ill to work and regular weekly/ monthly payments
Does an IP policy pay a lump sum or a regular income?
Regular income
What is IP also known as?
Permanent Health Insurance (PHI)
When can an indicidual usually take out an IP policy and when will it end?
Between 18-60, ends around retirement date
What is the deferred period in an IP policy?
The set period before a claim is payable (4, 12, 52 weeks) etc.
In an individual IP policy, how will an individual receive the benefits in the event of a payout?
Insurer pays directly to the insured free of tax
Through an employer scheme, how would an employee receive their benefits for an IP claim?
Benefit is payable to the employer and employee receives the salary net of tax & NICs
What is a rehabilitation benefit and why would a life office provide this for an IP policy?
Reduced levels of earnings when an employee returns to work after being off sick, encourages people to get back to work
What is a proportionate benefit for an IP policy?
Gives the policyholder a reduced monthly benefit, the same to the reduction in their earnings compared to earnings 12 months before incapacity
What are the 3 main cover types for IP policies?
Standard policies
Day one and back to day one policies
Group schemes
What are the characteristics of a standard IP policy?
Pays out after deferred period until retirement
Unlimited claims allowed
Benefit set to specified % of pre-claim income
What is the difference between a day 1 and back to day 1 policy?
Day 1 - begins from first day of illness, pays out weekly instead of monthly
Back to day 1 - Benefit not payable until deferred period, but then it will pay out amount from day 1
Who are day 1 and back to day 1 policy primarily for?
The self employed
Why do group schmes usually have a higher max benefit amount?
ATo cover the extra employer has to pay tax/ NICs on benefit
How is the underwriting of IP different to Life insurance?
Looking at morbidity (chance of getting ill) rather than mortality ( chance of dying)
Name 2 factors which affect the rate of an IP policy?
Age
Health
Smoking
Occupation
Hobies
Length of deferred period
What are the 3 categoeries of cover for IP policies regarding occupation?
Own Occupation (will pay out when can’t fdo own job)
Suited occipation (When can’t do own job or similar job)
Any occupation (can’t do any job)
What types of occupation would fall in to class 4 occupation types, and which would fall in to class 1?
Class 4 - manual jobs
Class 1 - professional services, clerical/ managerial
What can happen if someone changes their job, doesn;t notify the insurance co then tries to claim?
Insurer can decline, or reduce amount
What is the difference between a renewable and reviewable IP policy?
Reviewable - reviews premiums periodically in light with claims
Renewable - initial 5 year policy, can automatically renew at end of term but premiums may rise to reflect new age
In relaion to income protection, what is the definition of incapacity?
When a person is unable to work due to illness/ injury
If an insurance co doesn’t expect someon to recover from their incapacity, how will they pay the policyholder?
A commuted lump sum
What type of payment would a Critical Illness cover policy pay out in the event of a claim?
A tax free lump sum
When would a ciritical illness claim pay out?
When someone becomes critically ill and it’s a condition listed on their policy
