hk-iiqe-paper-5 flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Investment-linked assurance scheme
- A long term insurance policy whose value is linked to underlying investment funds; the policyholder bears investment risk while the insurer covers mortality risk.
- Account value
- The value of units held under the policy multiplied by the unit price at the valuation point, after deduction of applicable charges.
- Death benefit formula
- Usually the higher of a stated percentage of sum assured and the account value; the percentage and any age-related reduction are set in the policy.
- Free switching allowance
- The number of fund switches permitted each year without a switching fee; switches above the allowance attract a charge or spread.
- Capital guarantee rider
- An optional benefit guaranteeing a minimum maturity or death amount, subject to vesting conditions and the insurer's creditworthiness.
- Illustration assumed returns
- Hypothetical low and high rates of return used to show possible policy values; they are not projections or guarantees of future performance.
- Fund menu
- The range of investment funds offered under a policy; the insurer may add, close or merge funds according to the policy provisions.
- Asset allocation
- The split of a portfolio among asset classes such as equities, bonds and cash, chosen to match the client's horizon and risk tolerance.
- Diversification limit
- Spreading investments reduces company-specific risk but cannot remove market risk; the benefit depends on correlation between holdings.
- Currency risk
- The risk that exchange rate movements reduce the value of fund assets or policy benefits denominated in another currency.
- Fund objective and benchmark
- The stated investment goal and reference index of a fund, set out in its offering document together with permitted investment ranges.
- Rebalancing
- Restoring the portfolio to its target asset mix after market movements, typically reviewed at least annually or when drift is significant.
- Bid/offer spread
- The difference between the price at which units are allocated and the price at which they are redeemed; an implicit transaction cost.
- Premium allocation rate
- The percentage of each premium used to buy units; the remainder covers charges, and rates may increase in later policy years.
- Mortality and morbidity charge
- A periodic deduction from the account value that pays for the death and other insured benefits provided under the policy.
- Surrender charge
- A deduction applied on early termination, often declining over the policy term, which reduces the amount returned to the policyholder.
- Cooling-off period
- A period after delivery of the policy during which the client may cancel and receive a refund, adjusted for any market value loss.
- Product key facts statement
- A short standardized document summarizing an ILAS product's features, risks, charges and fund options for prospective policyholders.
- Insurance Authority
- The statutory body regulating insurance intermediaries and long term insurance products in Hong Kong under the Insurance Ordinance.
- SFC Type 1 registration
- The registration required for intermediaries dealing in securities, including units of ILAS funds, in addition to an insurance licence.
- Code on ILAS
- The SFC code governing the authorization and disclosure of investment-linked assurance schemes, including offering documents and key facts.
- Regulatory disclosure duty
- The obligation to disclose product risks, charges, remuneration and conflicts of interest accurately and in a balanced manner to clients.
- Financial needs analysis
- A documented assessment of the client's objectives, horizon, liquidity needs, existing coverage and financial situation before recommending a product.
- Risk profile questionnaire
- A structured tool that assigns the client a risk score based on tolerance and capacity, against which product risk is compared.
- Suitability assessment
- The evaluation of whether a recommended product matches the client's risk profile, objectives and circumstances; the basis must be recorded.
- Unsuitable transaction record
- Documentation explaining why a product does not match the client's profile and recording the client's informed instruction to proceed.
- Remuneration disclosure
- Informing the client of commissions and other benefits received by the intermediary from the insurer in connection with the sale.
- Death claim documentation
- Documents needed to pay a death benefit, typically including proof of death, the policy document and beneficiary identification.
- Partial surrender
- A withdrawal that cancels some units and reduces account value, subject to minimum remaining value and any applicable charges.
- Switch cut-off time
- The daily deadline for submitting a fund switch instruction; instructions received after it are processed at the next valuation point.
- Annual statement
- A yearly report showing units held, unit prices, account value, charges deducted and fund performance for the policyholder's review.
- Beneficiary nomination
- The policyholder's instruction naming who receives the death benefit; it should be updated after marriage, divorce or births.