{"id":47253,"date":"2019-11-20T17:19:26","date_gmt":"2019-11-20T07:19:26","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=47253"},"modified":"2020-10-30T09:26:16","modified_gmt":"2020-10-29T23:26:16","slug":"making-compliance-work-for-you-the-elements-of-valuable-life-insurance-part-2","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2019\/11\/20\/making-compliance-work-for-you-the-elements-of-valuable-life-insurance-part-2\/","title":{"rendered":"Making Compliance Work For You: The Elements of Valuable Life Insurance \u2013 Part 2"},"content":{"rendered":"<div class=\"header row\">\n<div class=\"intro\">\n<h3>In this the second of a three-part series, BT\u2019s Crissy Demanuele considers more of the fundamentals of life insurance advice through the lens of regulation and compliance. She pays particular attention to ASIC\u2019s October 2014 <a href=\"https:\/\/download.asic.gov.au\/media\/2012616\/rep413-published-9-october-2014.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">Report 413 Review of Retail Life Insurance Advice<\/a> and outlines why advisers need to heed the content of this report.<br \/>\nCrissy\u2019s 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\u2019t steeped in the world of life insurance advice\u2026<\/h3>\n<\/div>\n<\/div>\n<p><!--more--><\/p>\n<p>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.<\/p>\n<p>As discussed in the <a href=\"http:\/\/riskinfo.com.au\/news\/2019\/10\/17\/making-compliance-work-for-you-the-elements-of-valuable-life-insurance-part-1\/?utm_medium=email&amp;utm_campaign=riskinfo%20email%201224%20191017%20Adviser%20Focus&amp;utm_content=riskinfo%20email%201224%20191017%20Adviser%20Focus+CID_fec08b285e5616e2cfab32d691fa2409&amp;utm_source=Email%20Tracking&amp;utm_term=Making%20Compliance%20Work%20For%20You%20The%20Elements%20of%20Valuable%20Life%20Insurance%20%20Part%201\" target=\"_blank\" rel=\"noopener noreferrer\">first article<\/a> 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\u2019 trust and build relationships that last.<\/p>\n<p>Across three different articles, we discuss some of the elements of life insurance personal advice advisers may weigh up when assessing a client\u2019s life insurance needs:<\/p>\n<ul>\n<li>Premium comparisons<\/li>\n<li>Relevant product features<\/li>\n<li>The amount of cover required to meet the client\u2019s financial goals<\/li>\n<li>Underwriting pre-assessments<\/li>\n<li>Previous claims history<\/li>\n<li>Ratings from research houses<\/li>\n<\/ul>\n<p>These various elements of life insurance advice are also the subject of ASIC\u2019s 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.<\/p>\n<h3>Amount and types of cover<\/h3>\n<p>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\u2019s needs and objectives.<\/p>\n<p>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 \u2018value add\u2019 of life insurance advice to a client.<\/p>\n<p>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:<\/p>\n<ul>\n<li>The types of cover and product features the client requires<\/li>\n<li>The definitions of the products available inside and outside super<\/li>\n<li>The client\u2019s retirement savings goals<\/li>\n<li>Tax effectiveness of holding the cover inside super<\/li>\n<li>The client\u2019s health status<\/li>\n<li>The client\u2019s beneficiaries<\/li>\n<\/ul>\n<p>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.<\/p>\n<div style=\"padding: 20px; background: #eaeaea; border: 3px solid #22b24c;\">\n<h3>Example<\/h3>\n<p>Simon is single, aged 32 and owns his own home, which has a mortgage over it. He is working full-time.<\/p>\n<p>Simon\u2019s 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.<\/p>\n<p>Simon\u2019s 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 \u2018any occupation\u2019 TPD cover inside super, and link it to \u2018own occupation\u2019 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.<\/p>\n<\/div>\n<h3><\/h3>\n<h3>Conclusion<\/h3>\n<p>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\u2019 circumstances, financial goals and objectives. Detailed file notes should be kept and\u00a0 the client\u2019s statement of advice should include a description of their \u00a0individual circumstances.<\/p>\n<p>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.<\/p>\n<p>Advisers should also consider the types of insurance and levels of cover which will meet the client\u2019s goals and objectives.<\/p>\n<p>In the final article of this three-part series, we will discuss underwriting pre-assessments, clients\u2019 previous claims history and research houses\u2019 product ratings.<\/p>\n<div style=\"background: #eaeaea; padding: 20px; margin-bottom: 20px; clear: both;\">\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-46687\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2019\/09\/Crissy-hi-res.jpg\" alt=\"\" width=\"150\" height=\"180\" \/><\/p>\n<p><em>Crissy Demanuele is Senior Product Manager, Life Insurance, BT<\/em><\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<p style=\"text-align: center;\"><a  class=\"vc_btn vc_btn-black vc_btn-sm vc_btn_square \" href=\"https:\/\/riskinfo.com.au\/adviserfocus\/\" >Back to Adviser Focus Main Page&#8230;\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this the second of a three-part series, BT\u2019s Crissy Demanuele considers more of the fundamentals of life insurance advice through the lens of regulation and compliance. She pays particular attention to ASIC\u2019s October 2014 Report 413 Review of Retail Life Insurance Advice and outlines why advisers need to heed the content of this report. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":47254,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6868],"tags":[],"class_list":["post-47253","post","type-post","status-publish","format-standard","has-post-thumbnail","category-adviserfocus"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/47253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=47253"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/47253\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/47254"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=47253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=47253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=47253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}