IIQE Paper 3: Long Term Insurance Study Guide

It captures the core death-protection purpose, but the Notes also discuss life insurance uses involving saving, investment and retirement.

It is a business need: the Notes list key persons among business needs. Classifying the need clarifies the purpose to consider when comparing possible cover.

It was required when the contract began. Under the Notes, it does not need to continue until the insured event occurs.

No. Materiality concerns whether the information could influence a prudent insurer’s acceptance of the risk or premium decision; a connection to the later claim is not one of the stated tests.

It can matter when a suicide exclusion or an accidental-death rider is relevant, because the cause of death may determine whether that exclusion or additional benefit applies.

They are rating factors because they help determine the premium amount. Natural and level premium systems instead describe how that premium is scheduled over the policy term.

No. Term insurance pays when death occurs during the specified term while the policy is in force; survival to the end alone does not trigger a maturity benefit.

The policy matures and pays the face amount. Survival to the end is a benefit-triggering event for an endowment, unlike term insurance.

No. Its defining feature is that the death benefit is payable whenever death occurs, subject to the policy remaining in force; the Notes also describe payment at the mortality table’s end age.

Endowment insurance. Term insurance requires death during its term for a benefit, while whole life is defined by a death benefit payable whenever death occurs rather than by a selected short-term maturity.

Its pricing elements—protection cost, interest and expenses—are separately disclosed. A skipped premium may cause lapse if the cash value cannot meet upcoming charges.

Its value reflects the performance of the underlying investments represented by the units, so changes in those assets can change the linked policy value.

Universal life is identified by features such as flexible premiums and separately disclosed pricing elements. Unit-linked insurance is identified by policy value linked to investment units and their underlying assets.

An immediate annuity starts payments after one annuity interval. A deferred annuity begins at a specified future time or age, after its accumulation phase.

A pension may consist of an annuity, but the terms are not synonymous: pension describes retirement income provision, while an annuity is a contract promising periodic payments.

Yes. The Notes recognize eligible association groups, including clubs, as possible groups; the group policyholder and membership terms still need to be identified.

No. They may be the same person, but an individual may also take out a third-party policy on another person’s life.

Group insurance commonly uses one policy for several people. Eligibility is usually set by the employer and may include an actively-at-work condition.

Not necessarily. A waiting period may apply, and the insured must meet the policy’s definition and other conditions.

No. The Notes state that the basic policy remains in force and its face amount is payable in addition to disability income benefits, subject to the policy terms.

Check the rider’s definition of accidental causation, any required time limit between injury and death, and applicable exclusions.

Yes. The Notes treat specified loss of sight as a possible dismemberment benefit, with the amount determined by the policy schedule.

Find the injury in the policy’s schedule and apply its stated amount or percentage, then check any time limits and exclusions.

Check the policy’s other accident benefits schedule. AD&D concerns accidental death and specified dismemberment losses, not automatically every injury benefit.

No. The rider pays only when its specified disease, terminal-illness or procedure trigger and other conditions are met.

Depending on its terms, it may require medical confirmation or proof that the insured cannot perform a specified number of daily activities.

The LTC definition is most relevant because the claim concerns care needs and daily activities; the policy’s exact qualifying test still applies.

Both include basic benefits; a Flexi Plan also provides enhanced benefits, while a Standard Plan follows the scheme’s standardised basic design.

No. Its stated scope includes individual and group medical insurance, VHIS Certified Plans and other medical insurance business.

GL31. It applies to medical insurance business including group business; VHIS concerns the scheme and its Certified Plans.

No. The option must be exercised and an additional premium applies. That specific opportunity may be lost, though a later option may still be available.

Periodic increases to disability income benefits linked to a recognised independent index. The policy terms determine the adjustment; it is not a general increase to all cover.

It must be authorised by a specified senior official, made in writing and agreed to in writing by the policyowner.

No. The Notes state that Hong Kong law does not allow the clause to shield fraud by the claimant or insured.

No. Cover continues under the provision, but an unpaid premium may be deducted from a death benefit payable during that period.

When all primary beneficiaries fail to survive the life insured. The policy designation and any stated allocation still need to be checked.

Cash surrender. Reduced paid-up insurance keeps lower cover, while extended term keeps the original face amount for a limited period.

Under the customary terms described, it is added to the loan balance, and the outstanding amount is deducted from payable death or surrender proceeds.

Borrowing under a policy loan provision. Choosing surrender, reduced paid-up insurance or extended term insurance is instead a nonforfeiture action.

No. The Notes distinguish lapsed policies, which may qualify under the provision, from surrendered policies, which ordinarily do not.

Adjust the benefit to what the premium paid would have purchased had the correct age or sex been stated.

A collateral assignment is temporary security, normally limited to a loan and interest; an absolute assignment irrevocably transfers all ownership rights.

A collateral assignment. Naming the lender as beneficiary would be a designation, not the assignment of policy interests described in the Notes.

It may, if the policy permits, be applied to future premiums or used to purchase paid-up additional insurance. Other listed choices include cash or one-year term cover.

The life income option. A fixed-period option instead pays over an agreed period, while a fixed-amount option continues until proceeds and interest run out.

Check whether the death was established as suicide and whether it occurred within the exclusion period stated in that policy. Both matter because the exclusion depends on cause and timing.

It remains the applicant’s statement. The intermediary should ensure the applicant understands and verifies the recorded answer.

The applicant must be found insurable on standard terms at the time of application. Different proposed terms require agreement before cover begins on those terms.

Good service helps keep customers satisfied and can reduce avoidable errors and complaints. That supports continuity of long term policies and conservation of existing business.

The earlier delivery starts it, so the notice date controls. Exclude that delivery day when counting the 21 calendar days.

The customer must use existing policy cash value or savings created by reducing its premiums to fund the new policy, through one of the specified actions.

They have different certainty. Separating them helps the customer understand which amounts are promised and which depend on future experience or assumptions.

It is a policyowner option. The distribution method describes how the insurer declares or allocates dividends, such as cash dividend or bonus.

Class C business. The Notes identify GL16 as applying to long term insurance business other than Class C business.

The assessment should establish ability and willingness to pay throughout the premium term. Income may change at retirement, so future affordability needs consideration.

No. The Notes say the requirement applies to the specified applications and customers cannot opt out.

The insurer or intermediary must reasonably assess that the gift will not distract the customer from making an informed decision about buying the product.

The insurer may load the premium to reflect the higher expected risk. Other possible measures include a policy debt, exclusion or limited cover.

It is an after-sale policy change. Delivery concerns providing the issued policy; a beneficiary amendment is a later request subject to policy terms.

A maturity claim. It arises when the insured is alive at the policy’s maturity; death claims require death, while surrender is a policyowner’s termination for value.