Life and Health Insurance
Life insurance is a long-term contract paying a sum on death or survival. Candidates must distinguish term assurance (pure protection, no maturity value), whole-of-life (cover for the whole lifetime, often with investment element), endowment (pays on survival or earlier death) and annuities (income for life). Understand the underwriting factors: age, health, occupation, lifestyle (smoking, alcohol), family history and sum insured. Know the role of medical evidence, exclusions, waiting periods and suicide clauses.
Health insurance covers medical expenses or provides income replacement. Key concepts: deductibles/excess, co-insurance, waiting periods for pre-existing conditions, pre-authorisation, and the distinction between indemnity health plans (reimburse actual costs) and fixed-benefit/critical illness plans (pay a lump sum on diagnosis). Critical illness cover typically pays on diagnosis of a defined condition, subject to survival periods - a frequent exam trap.
Traps: assuming a life policy pays out for any death (suicide exclusions and non-disclosure can defeat claims); confusing the sum assured with the surrender value; and forgetting that health policies may exclude pre-existing conditions for a stated period. Also note that premiums for life cover are usually level or reviewable, and the insurer bears mortality/longevity risk.
Worked rule of thumb: For a critical illness claim, check three things - (1) the diagnosis matches a defined condition in the policy, (2) the survival period is met, and (3) full disclosure was made at application. If any fails, the claim may be declined or reduced.