Financial protection

The course material consists of:

11 chapters of study text

Several test your knowledge questions in each chapter

A few short audiovisual presentations in four chapters to help on key areas

Revision ...

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By studying each chapter and then taking the end of chapter assessment this will create an entry on your CPD certificate containing:

Your personal details

Course name

Chapter name

Assessment results for each chapter

Estimated CPD time for each chapter.

After taking a chapter assessment if you go to the CPD certificate link you can produce a CPD certificate. By selecting the date filter you can choose which items to include on your certificate. You can also download this to excel which will allow you to edit the certificate as required.

The estimated CPD times allocated the first time you take the end of chapter assessments are:

R05                     

Hours

Chapter 1

1.1

Chapter 2

2.3

Chapter 3

4.2

Chapter 4

9.6

Chapter 5

6

Chapter 6

5.7

Chapter 7

4.7

Chapter 8

3.2

Chapter 9

5.5

Chapter 10

4.5

Chapter 11

3.2

Tot...

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Statement of Professional Standing (SPS)

All advisers giving independent or restricted advice must hold a Statement of Professional Standing (SPS). This details evidence they subscribe to a code of ethics, are qualified and have kept their knowledge up to date.

Bodies accredited by the FCA will be responsible for issuing individuals with an SPS and for ensuring that advisers hold an appropriate QCF Level 4 qualification.

If an SPS is removed from an adviser, the FCA could levy a fine on them, suspend them or even decide to remove their approved person status, although it could also agree to an action plan to be undertaken before reinstatement.

FCA monitoring

Firms are obliged to inform the FCA if any of their advisers fall below its competence or ethical standards.

The FCA collects information about individual advisers, such as the qualifications they hold and which accredited body they use. The FCA uses this database to help identify the highest risk individuals.

Where we have created an audiovisual presentation you can view it in a new window by clicking on the image that appears at the top of the section. As detailed in the contents and information page before purchasing  this module there are a selection of animated audiovi...

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All risks can be categorised by assessing the severity of the impact and the probability of occurrence. Once assessed, decisions can be taken as to whether the risks can be managed (e.g. by taking preventative action or where the impact can be met using available resources) or insured (e.g. where the likelihood of the event is low but the financial impact could be high).

Insurance has the most effective role to play where there is a low frequency of occurrence but a high potential impact on individuals and their families such as death and disability.

Example

Fred and Freda are married with four...

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Financial protection is the term for a range of insurance products that would provide sums of money on the event of long-term illness, disability or death.

Lucy is a make-up artist working in the film industry. Her working pattern is irregular, usually three to four months of work at a time followed by periods of unemployment. Comment on the feasibility of insuring Lucy against the impact of unemployment.

Answer : Purchase course for answer

The social and economic landscape of the UK has changed drastically over the last 50 years and continues to evolve. The traditional linear path of lifestages that most people would have expected - i.e. childhood, education, marriage, children and retirement - are no longer typical. Attitudes to marriage, divorce, sexuality, equality and bringing up children have all changed.

Changing demographics have meant that attitudes to insurance have also changed. Some of the factors that have influenced the changes are as follows:

Unlike many other ...

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Many people have not taken out protection insurance because they do not understand what each type will do for them, they believe it is too expensive or they do not trust the insurer to pay out on a claim. Many people now also go to the internet to make a purchase, relying on their own judgements rather than getting professional advice.

What impact have changing family dynamics had on financial planning?

Answer : Purchase course for answer

The UK is the fourth largest market for life insurance in the world after the USA, China, and Japan; however, the ‘protection gap’ (shortfall in the amount required to maintain the current standard of living for dependents) is estimated at £2.5 trillion (Swiss Re, 2023).  The deficit is due to many factors, including limited budgets, personal views and no interaction with qualified practitioners who can make individuals awar...

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Economic Factors - the level of income and inflation will affect the level of disposable income available – a one percentage point increase in inflation will reduce the amount of life insurance in force by 1.4%

Dependants – whether they exist and how old they are / how long they are likely to remain dependent

What is the “Protection Gap”?

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Our general standards of living have improved dramatically over the ...

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Our working patterns are changing due to:

Fewer long-term contracts

More people working on short term renewable contracts

Many more individuals are self-employed

More women in work than in the 1950s

It is becoming common to have more than one job or career over a lifetime

The consequences of illness or disability are increasing as there is not a long-term relationship with one employer who may have looked after their staff well if they became ill.

The main factors which have recently affected product design and pricing are the use of health and lifestyle factors and the use of technology to set pricing policy:

Smoker/non-smoker rates - there is stro...

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Lives and lifestyles are now rated, creating different groups within the overall portfolio of insured lives. Some are treated advantageously and will pay very low premiums, but others - often with moderate health concerns - will not benefit from the rate reductions that should be available. A higher number of cases are also likely to be declined.

Since 21 December 2012, insurers cannot charge different premium rates for males and females, due to the EU Gender Directive.

What impact have improved mortality rates and cheaper premiums had on underwriting practices?

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After the changes to the provision of investment advice stemming from the Retail Distribution Review (RDR), attention has returned to the sale of prot...

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State three limitations of purchasing protection from an online portal, without advice.

The online portal cannot:

Give advice on how to set a policy up

Explain the differences between different types of policy

Give advice on an appropriate level of cover

Give advice on placing policies in trust

The protection market in t...

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NOTE - These questions are designed for revision purposes only and are therefore n...

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