A benefit received through employment that has a monetary value, such as private medical insurance, is known as a _____.
Benefit-in-kind
What is the main purpose of life assurance?
To provide a lump sum if the insured person dies during the term of the policy.
A _____ policy is a long-term insurance policy designed to pay out a cash lump sum on death, whenever that occurs.
whole of life
What is a ‘non-profit’ whole of life policy?
A policy that guarantees to pay a fixed, non-increasing amount of life cover on the death of the life assured.
In a with-profit policy, what is the ‘basic sum assured’?
The guaranteed minimum level amount of life cover payable on the death of the life assured.
What is the process of ‘smoothing’ in with-profit policies?
The life company holds back bonuses in good performance years to supplement bonus payments in years of underperformance.
What is a Market Value Reduction (MVR) in a with-profit policy?
A small percentage taken off the payout when you withdraw your money early, to balance the effect on other policyholders, especially during uncertain market conditions..
In a unit-linked policy, how are the charges for the cost of life cover typically paid?
the insurance company takes a small portion of your invested fund to pay for the life insurance.
This means the charges reduce the value of your units in the fun
What is the principle of ‘pound cost averaging’ in a regular premium unit-linked policy?
More units are purchased when prices are low and fewer when prices are high, lowering the average cost of units over the long term.
Which type of whole of life cover is initially the least expensive but has premiums that are likely to increase over time?
Maximum cover plans.
What is the maximum permitted monthly contribution for tax-efficient savings plans from a friendly society?
£25 per month or £270 per year.
A _____ policy pays out a cash lump sum on death only if it occurs during a specified period.
term assurance
Which type of term assurance has a sum assured that falls each year in a predetermined way, often to zero?
Decreasing term assurance.
What is a Family Income Benefit (FIB) policy?
It pays a regular income to your family if you die during the policy term,.
What right does a ‘convertible’ feature on a term assurance policy grant the policyholder?
the right to switch their term insurance into a permanent life insurance policy (like whole life or endowment) without needing to provide fresh health evidence.
What is a ‘joint life second death’ policy primarily used for? (what is the money used to cover)
To provide a lump sum after both individuals have died, often to cover an inheritance tax liability.
What are the statistical tables used by insurers to predict the number of claims for life assurance called?
Mortality tables.
What is the name of the process an insurance company uses to assess the risk posed by a potential client before providing cover?
Underwriting.
Under the Consumer Insurance (Disclosure and Representations) Act 2012, how is an ‘innocent’ misrepresentation treated at the point of claim?
The claim is accepted and paid in full.
If a customer failed to take reasonable care when providing information for an insurance policy, this is classified as _____ misrepresentation.
negligent
How does an insurer treat a ‘deliberate’ misrepresentation discovered at the point of claim?
The insurer can void the policy from inception.
What is Terminal Illness Benefit (TIB)? and whats the life expectancy too?
An additional benefit on a life policy that pays out the sum assured if the life assured is diagnosed with a life expectancy of less than twelve months.
Generally, any gain on a _____ policy is not taxable, whereas a gain on a _____ policy could be subject to higher rates of income tax.
qualifying; non-qualifying
What is the primary function of the claims department in a life office?
To pay valid claims as efficiently and speedily as possible while ensuring the right amount is paid to the right person.
