LO2 Protection Needs and Sources
Health, income, debt, death, estate and business needs; the relationship with assets and liabilities; and State, employer and private sources of protection.
How to prepare for R05
Match the annual edition to your sitting, quantify the event-driven shortfall, distinguish policy structures and tax, then test ownership, affordability and suitability.
Core concepts
Concept 1
Individuals may need capital or income on illness, incapacity, accident or death to support dependants, service debt, protect assets and meet estate liabilities.
Exam cue: Translate the event into a capital need, an income need or both, then offset reliable resources.
Concept 2
Sole traders, partnerships and SMEs can need loan, keyperson and ownership protection because a person’s death or incapacity may affect profit, debt and control.
Exam cue: For a business, identify whether the exposure concerns debt, profit, ownership or continuity.
Concept 3
State and NHS support, employer individual or group schemes, life and pension policies, and health or other insurance provide different benefits, eligibility and certainty.
Exam cue: Classify each source as State, employer, pension, life assurance, health insurance or other cover.
Risk pitfalls and guardrails
Counting an asset as available without considering ownership, liquidity, tax or competing use.
Guardrail: Do not mix capital, income, treatment, care and debt benefits, or assume State, employer and policy resources have identical amount, timing and certainty.
Applying personal family protection logic unchanged to keyperson or shareholder needs.
Guardrail: Do not mix capital, income, treatment, care and debt benefits, or assume State, employer and policy resources have identical amount, timing and certainty.
Assuming State or employer benefits exactly match the required amount, timing and duration.
Guardrail: Do not mix capital, income, treatment, care and debt benefits, or assume State, employer and policy resources have identical amount, timing and certainty.
Memory anchors
HIDDE
Health, income, debt, death and estate are core personal protection needs.
Capital or Income
Classify every shortfall by amount, start date and duration.
AIL
Assets, income and liabilities shape the net need.
BLOC
Business loan, loss of profit, ownership and continuity drive business protection.
SEPH
State, employer, pension and private health or insurance are distinct sources.
Resource Test
Check amount, eligibility, timing, duration, certainty and tax.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
A parent dies leaving a £180,000 repayment mortgage and no usable savings. What is the clearest immediate capital need?
A family needs £30,000 a year for 12 years after a breadwinner's death and ignores growth and inflation. What gross income capital is required?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
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