Ro5 - Self Test Questions

Front 1

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

Back 1

As society changes people need products with greater flexibility new options covering new risks.

Front 2

How does the distribution method used to access customers affect protection product features?

Back 2

The more direct the method,the simpler the product and proposition.

Front 3

What does the protection gap signify?

Back 3

The shortfall in the amount of cover necessary to maintain the current living standards of dependants.

Front 4

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

Back 4

Through their advertising and marketing, public information campaigns and day to day dealings with the customers.

Front 5

In what ways is the presence of the welfare state a hindrance and help to sales protection?

Back 5

It hinders development because people believe the state will provide for them. It helps in that gaps in welfare provision receive widespread publicity thereby providing opportunities for protection providers.

Front 6

Which factors impact the sale of mortality protection?

Back 6

Affordability

Housing market

Income

Front 7

What is preferred life insurance?

Back 7

A product which segments lives according to lifestyle or health characteristics.

Front 8

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

Back 8

Not explicitly, but it is emerging inadvertently as underwriting standards become more stringent.

Front 9

How do online portals lead to commoditisation of term life insurance?

Back 9

Because of their exclusive focus on price.

Front 10

Can critical illness cover be combined with life cover in one contract?

Back 10

Yes

Front 11

For a person aged 35, is the risk of being off work due to illness or accident greater or less than the risk of death?

Back 11

Greater.

Front 12

What is the current nil rate band for IHT?

Back 12

£325,000

Front 13

Why might an employer be able to get cheaper private medical insurance premiums than an individual?

Back 13

Through the power of being a bulk buyer.

Front 14

What is the extent of insurance interest for a divorced spouse in their ex spouse policy?

Back 14

It is limited to the extent of any maintenance paid to the divorced spouse.

Front 15

Name four areas of need for protection.

Back 15

Any four from below:

Health, incapacity or accident

Income, mortgage and other debt

Death

Asset protection

Business protection

Front 16

Why is insurance against unemployment usually limited to repayments on a mortgage or loan rather than redundancy?

Back 16

Redundancy is very difficult to predict and the effects are even more difficult to quantify, so cover is usually limited to the extent of the loan ect. So that the life company underwriters can both assess and limit the risk.

Front 17

Why is it usually not in the clients interest to replace an existing critical illness policy even though the premium may be cheaper?

Back 17

Because the illnesses covered may well have been reduced and the criteria for claims may have been tightened.

Front 18

Which government department administers state benefits?

Back 18

The department for work and pensions.

Front 19

What is a means tested benefit?

Back 19

A benefit only payable to those with income or capital below a certain level.

Front 20

Who can claim jobseekers Allowance?

Back 20

An unemployed person who is fit and available for work and actively seeking employment. £2000

Front 21

How much is the bereavement payment?

Back 21

£2000

Front 22

What is the guaranteed minimum income for a single pensioner under the pension credit system?

Back 22

£148.35

Front 23

To whom is any child tax credit payable?

Back 23

Directly by HMRC

Front 24

How is working tax credit paid to employees?

Back 24

Directly by HMRC

Front 25

For what purpose are joint second death policies used?

Back 25

Mainly IHT planning.

Front 26

What is convertible term assurance?

Back 26

A term assurance with an option to convert to an endowment or whole of life policy without evidence of health at anytime before expiry.

Front 27

Why are premiums derived from mortality table loaded?

Back 27

To cover expenses of the life office in marketing, selling and administratering the policy.

Front 28

How can the owner of an existing life policy put it in trust?

Back 28

By assigning it to trustees using a deed of assignment.

Front 29

What is the difference between big T and little T tell underwriting?

Back 29

Big T tele underwriting involves the life office or a third party asking all the medical questions.

Little T involves the underwriter collecting supplementary information directly from the proposer after they have completed a standard proposal form.

Front 30

How will an insurer treat a claim when there has been a negligent non - disclosure of a material fact?

Back 30

The insurer will make a payment that is proportionate to the effect of the non disclosure.

Front 31

If terminal illness cover is part of a term assurance, when will it normally apply?

Back 31

During the last 18 months of the contract.

Front 32

What proof of title will be required for a death claim on a unassigned own life policy, and to whine will the money be payable?

Back 32

The appropriate grant of administration and the money would be payable to the legal personal representative / executors of the will.

Front 33

What might be required if a policyholder cannot produce document on a claim?

Back 33

An indemnity form and / or a statutory declaration.

Front 34

What is the effective rate of tax on UK dividends within the life fund?

Back 34

Nil as it covered by the tax credit.

Front 35

What is the minimum sum assured for a whole of life policy to be qualifying?

Back 35

75% of the premiums which would be payable if death were to occur on the life assured's 75th birthday.

Front 36

When is death a chargeable event on a qualifying policy?

Back 36

If the policy has been paid up within the first ten years ( or three quarters of the term if sooner) or if the £3,600 a year premium rule in place from 31 March 2012 has been breached by the policy.

Front 37

What is a relevant capital payment for a chargeable gain calculation?

Back 37

Any benefit of capital nature paid under the policy before the chargeable event.

Front 38

A client has two maturing savings endowment policies. The first is a qualifying policy. The second is a restricted relief qualifying policy. What is the main difference in the tax treatment of the maturity proceeds of the two policy?

Back 38

The maturity proceeds of the qualifying policy are paid free from liability to personal income tax. Part of the maturity proceeds of the RRQP is potentially subject to personal liability to income tax.

Front 39

What is the transfer of value for IHT purposes?

Back 39

Any disposition made by the transferor by which the value of the estate immediately afterwards is less than it would have been if the disposition had not been made.

Front 40

What is the current lifetime rate of IHT?

Back 40

20%

Front 41

Which two IHT exemptions are often used for policy premiums?

Back 41

The annual and normal expenditure exemptions.

Front 42

Which IPI incapacity definition gives the widest cover?

Back 42

Own occupation.

Front 43

What are the normal IPI benefit limits?

Back 43

Generally 50 - 60% of earnings for individual policies, or up to 75% for group policies.

Front 44

What is a disadvantage for the insured of reviewable IPI premiums?

Back 44

Unknown future costs - premiums could increase substantially on a review.

Front 45

How does the differed period affect IPI premium rates?

Back 45

The longer the deferred period, the cheaper the premium rate.

Front 46

Name five common exclusions from IPI contracts.

Back 46

Any of:

Criminal activity

Taking alcohol or drugs unless prescribed.

Intentional self inflicted industry.

Pregnancy, childbirth and associated complications.

Aviation other than as a fair paying passenger on a commercially registered aircraft.

AIDS/HIV

Failure to follow medical advice.

Front 47

What are IPI premiums based on?

Back 47

Morbidity statistics.

Front 48

In what occupational class would a chef be categorised?

Back 48

Class 2 - catering

Front 49

When might an insurer offer a lump sum payment?

Back 49

If the insured person is not expected to recover from their incapacity.

Front 50

When might a claimant pay tax on the benefit from an IPI policy?

Back 50

When the payment is from a group policy that is paid via the employer.

Front 51

What does a menu style of CIC give the client?

Back 51

The ability to choose from a list of conditions for which they would like cover.

Front 52

What type of trust is most suitable for a life assurance contract with CIC?

Back 52

A split benefit trust.

Front 53

T

Back 53

Y

Front 54

What is the tax position of the payment of benefits under a CIC policy?

Back 54

Completely tax free.

Front 55

If a policyholder makes a CIC claim for a cancer diagnosis, having failed to disclose that her mother had previously been treated for beast cancer can the life company avoid the claim?

Back 55

Yes the life company can avoid the claim, provided it asked clear and direct questions that should have led to the disclosure.

Front 56

Would a policyholder diagnosed with schizophrenia be successful in making a CIC claim?

Back 56

Generally not. Mental illness are not normally covered by CIC contracts. However, if the condition resulted in a period of incapacity, a claim under an IPI policy may be successful.

Front 57

Who can carry out a care assessment on an individual?

Back 57

The local authority or a specialist provider.

Front 58

What sort of care is the NHS in England responsible for once someone has left hospital?

Back 58

Continuing health care only

Front 59

How many nursing bands are there in England?

Back 59

One

Front 60

What is attendance allowance?

Back 60

When an individual pays their own care fees, they are entitled to claim an allowance from the government to help with personal care and / or supervision.

Front 61

What is domiciliary care?

Back 61

Care at home

Front 62

What type of investment insures against the risk of a client living longer than expected?

Back 62

Annuity.

Front 63

Name the six activities of daily living?

Back 63

Mobility

Washing

Dressing

Feeding

Transferring

Continence

Front 64

Albert has an arrangement where he borrows money from his bank, secured against his home, with interest rolled up and payable on his death. What is this arrangement called?

Back 64

Equity release - lifetime loan