Product needs

Question 1

Needs Endowment Assurance (4)

Answer 1

• Primarily a savings vehicle to provide a lump sum on survival to a known date (e.g., retirement).
• Used as a means of repaying capital on an interest-only loan.
• May also provide protection for dependants (if a death benefit is included).
• Used as a means of transferring wealth (e.g., from parents to children).

Question 2

Needs WLA (3)

Answer 2

• General purpose contract for long-term protection for dependants.
• Useful for providing for funeral expenses or meeting liabilities to tax (e.g., inheritance tax or death duties) arising on death.
• Protecting the expected transfer of wealth between generations.

Question 3

Needs TA (3)

Answer 3

• Provides protection against financial loss for dependants.
• Provides low-cost death cover compared to Endowment or Whole Life assurance.
• Used by corporate bodies or partnerships to provide protection against financial loss on the death of a key person (Keyman cover).

Question 4

Needs Decreasing Term Assurance

Answer 4

• Used to repay the balance outstanding under a repayment loan.
• Can provide an income for a family with children until the children become self-sufficien

Question 5

Needs Renewable/Convertible Term Assurance (2)

Answer 5

• Provides the attraction of low-cost death cover (Term Assurance) combined with the certainty of being able to convert to a permanent contract (Whole Life or Endowment Assurance) when affordable.
• Offers the option to renew the original contract for a further term without providing health evidence.

Question 6

Needs Immediate Annuity (4)

Answer 6

• Main purpose is to convert capital into lifetime income.
• Removes the uncertainty of how quickly capital should be spent over the consumer’s remaining lifetime.
• Protects the policyholder from the risk of living too long (longevity risk).
• Can be used to fund payments for temporary periods, such as school fees.

Question 7

Needs deferred annuity (2)

Answer 7

• Enables individuals to build up a pension that becomes payable on their retirement from gainful employment.
• Can meet the need for a cash sum at retirement (vesting date) if an alternative lump sum is offered in lieu of part or all of the pension.
• savings vehicle
• protects against investment and longevity risk