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SA1 Ch19 2020 April notes - practice questions 19.

Discussion in 'SA1' started by arnie_d12, Feb 24, 2020.

  1. arnie_d12

    arnie_d12 Member

    Hi,

    I've come across a question in the end of chapter questions and I found that I would have answered it very differently to the solutions - please can you tell me how to approach it differently?

    Q 19.2
    The question gives some background about a proprietary long-term insurer writing significant volumes of only conventional IP over past few years.
    (i) Explain how income protection business meets the needs of customers. [13]

    I approached this question thinking about the following:
    • Something similar to Ch2 where in the summary it has how IP meets customer needs - Provides replacement income
    • Ch2 also has info about locum cover and employers providing provisions for its employees but this didn't strike me as conventional IP?
    Some of the answer has points which I wouldn't have included such as:
    • Limitations of benefits - this doesn't sound like it meets the needs of the customer?
    • Unemployment cover may be a peril that is covered - usually told that IP doesn't cover this
    • Locum/group - doesn't feel like conventional IP
    • Popular IP product would mean cross-selling opportunities
    Some of the above points feel like they are more suited to product design. How can I make sure I know to include the above in a question like this?

    Thanks,
    Arnab
     
    arnie_d12, Feb 24, 2020
    #1
  2. Sarah Byrne

    Sarah Byrne ActEd Tutor Staff Member

    Hi Arnab

    It's worth nothing first of all that there are over 18 marks available in this solution, and you only needed 13 to score full marks (and less to pass). So, don't panic if you don't mention everything in your solution!

    Limitations on benefits - these could help the product be tailored to customer needs, for example using deferred periods to match with any employer provided sick pay, or only paying for the period of a loan repayment.

    Unemployment cover - I'm with you and wouldn't have mentioned this, I'll review this point for next year.

    Locum/group - conventional just means not unit-linked or with-profits. So, locum and group cover is absolutely relevant to this solution. More generally for SA1 it's always worth thinking about both individual and group cover unless the question specifically says it is only one. For a group scheme, the employer is the 'customer' and so the product would need to meet their needs too.

    Cross-selling opportunities - this is because if we consider the customer as those selling the product too. It will meet their needs if it gives a good image of the insurer and therefore encourages sales of other products in the future (or perhaps makes these sales easier!).

    For 13 marks here it was important to try and think of every possible point! One of the key things for the SA1 exam is writing enough. If you only wrote enough for 8 marks here for example, you would only score a maximum of 8, and if they don't all score may end up with 5 or 6. By stretching your solution and thinking of other points that might be relevant (and tailoring them to the question), you will hopefully hit a few more points on the marking schedule. So, if you write enough for 13 marks, you have a better chance of scoring 8 or 9 marks (and may be more).

    Hope this helps.
    Sarah
     
    Sarah Byrne, Feb 26, 2020
    #2

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