Advising on Protection Products Flashcards
6 cards from real CEMAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Advising on Protection Products flashcards as text
What is the purpose of buildings and contents insurance in the context of mortgage advice?
Answer: Buildings insurance protects the property structure (required by lenders), while contents insurance protects personal belongings — both form part of comprehensive home protection advice
Buildings insurance is a mortgage condition protecting the lender's security, while contents insurance protects the borrower's possessions — together they provide comprehensive home protection.
What are the key exclusions a client should be aware of in a typical income protection policy?
Answer: Common exclusions include pre-existing medical conditions, self-inflicted injuries, drug or alcohol-related conditions, and claims within the deferred period
Income protection policies typically exclude pre-existing conditions, self-inflicted injuries, substance abuse-related claims, and do not pay during the initial deferred period.
How does family income benefit differ from standard life insurance?
Answer: Instead of a one-off lump sum, it pays a regular tax-free income to dependants from the date of death until the end of the policy term
Family income benefit pays a regular income to the family from the date of the policyholder's death until the policy term expires, rather than a single lump sum.
What factors should an adviser consider when recommending the appropriate level of income protection cover?
Answer: The client's total essential expenditure including mortgage, bills, living costs, and any existing cover or sick pay entitlements
The adviser must assess total financial needs including mortgage, household bills, and living costs, minus any existing provisions such as employer sick pay or state benefits.
What is the significance of the deferred period in an income protection policy?
Answer: It is the waiting period between the start of incapacity and when benefit payments begin, with longer deferred periods resulting in lower premiums
The deferred period is the waiting time between becoming unable to work and receiving benefit payments. Longer deferred periods reduce premiums because the insurer pays out for shorter periods.
What is the relevance of the Insurance Act 2015 to mortgage protection policies?
Answer: It reformed the duty of disclosure for consumers and businesses, replacing the duty of utmost good faith with a duty of fair presentation for business insurance and consumer-friendly rules for personal policies
The Insurance Act 2015 reformed disclosure duties and remedies for misrepresentation, creating a fairer balance between insurers and policyholders.