In this the second of a three-part series, BT’s Crissy De Manuele considers more of the fundamentals of life insurance advice through the lens of regulation and compliance. She pays particular attention to ASIC’s October 2014 Report 413 Review of Retail Life Insurance Advice and outlines why advisers need to heed the content of this report.
Crissy’s observations may act as a refresher for established risk specialists and may also provide much-needed direction for new entrants or those advisers who aren’t steeped in the world of life insurance advice…

In this article, we continue to break down the elements of valuable life insurance advice. We turn our focus on requirements regarding the amount and types of cover, and whether the insurance should be held inside or outside super.

As discussed in the first article of this series, navigating regulatory or compliance frameworks can be onerous; however, they can also provide useful guidelines on providing valuable advice that can win clients’ trust and build relationships that last.

Across three different articles, we discuss some of the elements of life insurance personal advice advisers may weigh up when assessing a client’s life insurance needs:

  • Premium comparisons
  • Relevant product features
  • The amount of cover required to meet the client’s financial goals
  • Underwriting pre-assessments
  • Previous claims history
  • Ratings from research houses

These various elements of life insurance advice are also the subject of ASIC’s review of retail life insurance advice, Report 413. However, instead of taking a compliance perspective, we take a practical approach, and focus on providing advice that clients may perceive as adding value.

Amount and types of cover

According to ASIC Report 413, an adviser should keep documented evidence of the advice provided which explains how the recommended sum insured may meet the client’s needs and objectives.

There needs to be engagement with the client to help them arrive at the right type of cover that is appropriate to their individual circumstances and also affordable for them over time. This is the ‘value add’ of life insurance advice to a client.

It may be appropriate to consider whether life insurance cover should be held inside or outside super. The most appropriate solution for the client may depend on factors such as:

  • The types of cover and product features the client requires
  • The definitions of the products available inside and outside super
  • The client’s retirement savings goals
  • Tax effectiveness of holding the cover inside super
  • The client’s health status
  • The client’s beneficiaries

Where it is established that it is appropriate for the client to hold insurance inside super, but the client requires a type of insurance cover or features which cannot be held inside super, super-linking could be considered. Super-linking allows certain types of cover to be held inside super, whilst being linked to cover which is held outside. This generally allows most of the premium to be paid from within the super fund.


Simon is single, aged 32 and owns his own home, which has a mortgage over it. He is working full-time.

Simon’s financial adviser recommends that he take out income protection (IP) cover with features such as crisis benefit and also own occupation total and permanent (TPD) cover. To assist with his cash flow, he is also advised to take out the cover inside his super fund. However only basic IP cover and any occupation TPD cover can be held within super.

Simon’s adviser suggests that he take out IP cover inside super, and link it to IP cover outside super with additional features. He also suggests that Simon hold ‘any occupation’ TPD cover inside super, and link it to ‘own occupation’ TPD cover outside super. Under this arrangement, most of the premiums can be paid from within super, and Simon can still have the types of cover required to meet his needs. Simon is also advised to set up salary sacrifice contributions into super which allows him to pay the premiums inside super in a tax-effective way.


Advisers should keep documented evidence to show why they recommended a particular insurance product over other products. It is also necessary for advisers to understand their clients’ circumstances, financial goals and objectives. Detailed file notes should be kept and  the client’s statement of advice should include a description of their  individual circumstances.

This will then allow advisers to tailor their advice for each client, and match their needs to product preferences, after the adviser has conducted reasonable research into different products. This will result in a solution which provides the best fit for the client.

Advisers should also consider the types of insurance and levels of cover which will meet the client’s goals and objectives.

In the final article of this three-part series, we will discuss underwriting pre-assessments, clients’ previous claims history and research houses’ product ratings.

Crissy De Manuele is Senior Product Manager, Life Insurance, BT


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  1. Yep Chrissy, Great dissertation from an unemotional, compliance product manufacturers perspective. Question for you if I may please. Have you ever actually sold insurance? You know, been in front of a husband and wife at 7.00 pm at night in there house? If you have you will then be aware of the emotional portion of the sale process so lacking in your cosy technophobe diatribe. Until product manufacturers start understanding the sales process to actually SELL insurance then we will continue to see the take up of insurance diminish. Pleased don’t give gratuitous advice if you have not actually sold the product. Jim Prigg Knowledgermaster

    • What? Although it would be concerning if any adviser gained anything from this article (given its simplicity) the article has nothing to do with selling and sales skills are obviously not mutually exclusive from what the author is saying. You sound jilted, presumably over some sort of insecurity given you seen a message in this article that isnt there. There’s irony in your criticism as you yourself are not an adviser. As they say, those who can’t do, teach.

      • I normally don’t reply to anon type keyboard warriors, but just to help you the following apply. Yes I have sold a bit of insurance when it was stand alone offer not confused with financial planning. If you like I will share my helpful book at no cost to you “A practical guide on how to sell insurance”. This is a 76 page extravaganza on all the aspects of the sale of insurance from prospecting, phone technique, handling objections to client retention. But of course to receive this valuable resource you will have to reveal you identity. WAITING.

  2. I assume this article is targeting newbie “backroom” risk advisers in a planners or accountants office – otherwise its just a recant of Rep 413. Whether ASIC likes it or not, life insurance is an emotional sale and there are no tips here for that crucial issue. BTW, an experienced colleague and I both reckon there has not been any decent sales training for new riskies from insurers for at least a decade where the “sale” is disassembled and rebuilt. Jim and others have some good material. Maybe the author should read the books by Russell Collins and Chris Unwin for starters.

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