Diploma of Financial Planning
Diploma of Financial Planning
Module 4 Assignment
Submission Instructions:
Key steps that must be followed:
Please complete the Declaration of Authenticity at the bottom of this page.
Once you have completed all parts of the assessment and saved it (eg. to your desktop computer), login to the Monarch Learning Management System (LMS) to submit your assessment.
In the LMS, click on the file Submit DFP Module 4 Assignment in the Module 4 section of your course and upload your assessment file/s by following the prompts.
Please be sure to click Continue after clicking submit. This ensures your assessor receives notification very important!
Declaration of Understanding and Authenticity *
I have read and understood the assessment instructions provided to me in the Learning Management System.
I certify that the attached material is my original work. No other persons work has been used without due acknowledgement. I understand that the work submitted may be reproduced and/or communicated for the purpose
of detecting plagiarism.
453239418734000111934318734000
Student Name*: Date:
* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by the above student declaration.
Important assessment information
Aims of this assessment
This assessment covers the fundamentals of insurance. General insurance concepts are addressed, including the role of actuaries and underwriters. Personal insurance contracts are explored including Term Life policies, Total and Permanent Disablement (TPD) policies, Critical Illness (Trauma) policies and Income Protection insurance policies. The requirements for insurance to be offered via a Product Disclosure Statement (PDS) is covered with specific emphasis on researching specific definitions that dictate what is included, and what is not included within a standard contract. Insurance buy-back features within Term Life and Trauma insurance policies are a focus. The tax benefits and implications associated with income protection policy premiums and benefits are also addressed. Statement of Advice (SOA) documents focussing on insurance advice are critiqued, with a focus on determining whether a reasonable basis for advice has been met. Lump sum calculation for Term Life and TPD insurance needs are calculated using the Income Capitalisation, Age-to-retirement, and goals approaches. Risk and best practice involving replacing insurance policies is explored, as is the formal insurance review process.
Marking and feedback
This assignment contains 6 assessment activities each containing specific instructions.
This particular assessment forms part of your overall assessment for the following units of competency:
FNSASICX503
FNSASICZ503
FNSASICM503
FNSFPL504
Grading for this assessment will be deemed competent or not-yet-competent in line with specified educational standards under the Australian Qualifications Framework.
What does competent mean?
These answers contain relevant and accurate information in response to the question/s with limited serious errors in fact or application. If incorrect information is contained in an answer, it must be fundamentally outweighed by the accurate information provided. This will be assessed against a marking guide provided to assessors for their determination.
What does not-yet-competent mean?
This occurs when an assessment does not meet the marking guide standards provided to assessors. These answers either do not address the question specifically, or are wrong from a legislative perspective, or are incorrectly applied. Answers that omit to provide a response to any significant issue (where multiple issues must be addressed in a question) may also be deemed not-yet-competent. Answers that have faulty reasoning, a poor standard of expression or include plagiarism may also be deemed not-yet-competent. Please note, additional information regarding Monarchs plagiarism policy is contained in the Student Information Guide which can be found here: http://www.monarch.edu.au/student-info/What happens if you are deemed not-yet-competent?
In the event you do not achieve competency by your assessor on this assessment, you will be given one more opportunity to re-submit the assessment after consultation with your Trainer/ Assessor. You will know your assessment is deemed not-yet-competent if your grade book in the Monarch LMS says NYC after you have received an email from your assessor advising your assessment has been graded.
Important: It is your responsibility to ensure your assessment resubmission addresses all areas deemed unsatisfactory by your assessor. Please note, if you are still unsuccessful in meeting competency after resubmitting your assessment, you will be required to repeat those units.
In the event that you have concerns about the assessment decision then you can refer to our Complaints & Appeals process also contained within the Student Information Guide.
Expectations from your assessor when answering different types of assessment questions
Knowledge based questions:
A knowledge based question requires you to clearly identify and cover the key subject matter areas raised in the question in full as part of the response.
Skill based questions:
Where you are asked to write as though you are speaking to a client, your answers must show your ability to:
understand your clients concerns/perspective/views
show empathy
display a professional response
explain ideas clearly and simply so your client can understand the issues
How to answer written questionsAfter each question, there is a blank text box for you to start typing your answer in, as indicated below.
Here is a sample task instruction, asking you to enter text in the box below.
Type your answer hereThe text box will expand when you are typing your answer.Unless specified, most questions require a short answer response of 1 or 2 short paragraphs.
Good luck
Finally, good luck with your learning and assessments and remember your trainers are here to assist you
Activity 1
Short answer: General Insurance and Personal Insurance
Instructions
This is an open book assessment activity.
You are required to read this assessment and answer all 8 questions that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 1 hour
Questions
For each of the following situations, describe the insurance policy(s) you believe would entitle a claim to be made. In doing so, please explain why you think a claim could be made.
Sian manages a gift shop and slips on a step at home one day and suffers a shoulder injury. As a result she is unable to work for 3 months and incurs significant medical costs.
Matthew works as an employee at a bank. He is suffering from stress and his doctor has advised him to rest at home for 2 weeks.
Umar is knocked down by a fork lift at work and is hospitalised for 3 weeks.
Annette, an employee, is diagnosed with cancer and she incurs a significant amount of medical costs.
Annette, from the previous scenario, dies within 6 months of her cancer diagnosis.
John was a self-employed plumber. Due to an accident at a construction site one day, he suffers a serious injury and is unable to work again as a plumber or tradesperson generally.
A restaurant that is shut down for 6 months because of a cyclone.
A tenant whose flat burns down.
Activity 2
Case study: General Insurance
Instructions
This is an open book assessment activity.
You are required to read this assessment and answer all 3 questions that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 30 minutes
Background
Alberto recently acquired a new helicopter. He plans to use it mainly for personal purposes, but will also use it for charter trips in order to raise money to help him make payments on the loan and for maintenance costs.
Questions
Advise Alberto on the risks he faces in owning the helicopter, whether the risks are speculative or pure, and how best he might handle each of those risks.
To save some money, Alberto decides to insure the helicopter for less than what it is worth. How is an insurance company likely to deal with this position in the event of a claim?
Explain the difference between an actuary and an underwriter.
Activity 3
Simulation exercise: Life Insurance, Trauma and TPD
Instructions
This is an open book assessment activity.
You are required to read this assessment and answer all 12 questions that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 2 hours
Background
Craig and Elizabeth come to see you for their first appointment meeting. Craig is 41 and Elizabeth is 39. They are married with three children aged 9, 8 and 5. Whilst Craig is the main breadwinner, Elizabeth has just returned to work part-time. As part of your first interview, you are trying to determine your clients insurance needs.
Questions:
How could you respond to Craig who says Elizabeth does not need any life insurance because I already have life insurance and income protection insurance.?
List 4 reasons why your clients might be reluctant to take on more life insurance.
Explain to Craig and Elizabeth some of the characteristics of trauma insurance.
What definition/s would Craig need to satisfy to receive a TPD payout whilst working as an electrician under the any occupation definition? Refer to page 134 136 of the latest Comminsure PDS included in Appendix 1 of Module 4. (You will find the same information on page 104 106 if you are using the old appendix)
How would you explain to any client why only having term life insurance may be insufficient?
How often do you think it would be appropriate to review Craig and Elizabeths personal insurance? Explain why.
In your annual review a couple of years later (after Craig and Elizabeth have become happy clients of yours), they inform you they are borrowing $1.2 million to purchase a share in a business. Explain why an insurance review is necessary at this time.
Provide a list of 4 hypothetical circumstances which would justify a review of insurance cover for Craig and Elizabeth.
Three years after first sitting down with Craig and Elizabeth (who are now your clients), Craig suffers a stroke at home. Luckily you advised Craig three years ago about the benefits of critical illness (trauma insurance) so he chose to take out a linked (bundled) policy for term life insurance and TPD of $1,250,000 for each cover and an additional stand-alone critical illness (trauma) policy of $380,000 where claims can be paid out after 14 days of suffering a trauma. Five days after his stroke, Elizabeth calls you to tell you Craig is not responding to treatment and it is touch and go. She asks you how much cover they have.
If Craig died 6 days after his stroke, how much insurance would Elizabeth and the children receive under the policies?
If Craig died 43 days after his stroke, how much insurance would Elizabeth and the children receive under the policies?
If Craig survived the stroke, but was now permanently wheel chair bound and unable to work, what insurance would he be entitled to, and how much?
If Craig survived the stroke, but was now wheel chair bound and unable to work, explain how a buy back insurance policy would work with respect to his Term Life and TPD policy (assuming the Term Life and TPD was linked under the one policy)?
Activity 4
Case study and written questions: Insurance Income Protection
Instructions
This is an open book assessment activity.
You are required to read this assessment and answer all 5 questions that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 1 hour
Background
Mary and John are in their mid-thirties. They have 2 children aged 7 years and 10 years. They have a mortgage of $400,000. John works as a welder in a large automotive firm earning $54,000 per annum. Mary does not work in paid employment. Both Mary and John have term life insurance policies for $600,000 each.
Questions:
Would income protection insurance be appropriate for John to consider? Why?
Would income protection insurance be appropriate for Mary to consider? Why?
If John had taken your advice and taken out income protection insurance, how much would he receive each month (after his waiting period had been met) if he was unable to work due to depression?
What types of insurance should Mary consider?
If cash flow is a concern for John and Mary, what strategies could you suggest to enable them to continue with their term life insurance but add income protection as well for John?
Activity 5
Simulation exercise: Statement of Advice - Analysis
Instructions
This is an open book assessment activity.
You are required to read this assessment and answer all 6 questions that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 2 hours
Background
Refer to Appendix 4 of Module 1 for an example of a Statement of Advice (SOA). It is not a comprehensive SOA. For example, it does not include modelling as to whether retirement aims will in fact be achieved. It is quite basic, yet it is still approximately 50 pages in length.
Many industry regulators have lamented that there is a lot of jargon and legalese in SOAs. Consequently many end clients of financial advisers find these SOAs difficult and cumbersome to digest even though they are paying for them!
The SOA you are to read in Appendix 4 is written by a fictional adviser, and includes fictional clients and investment products. Nevertheless, it is based in many parts on norms within the financial planning industry, enforced by dealer groups that are concerned about being litigated against by disgruntled clients.
Questions:
After reading the SOA by Savilles Financial Advisers, has the financial adviser in your opinion sufficiently explained how he arrived at $500,000 of life cover and TPD required to satisfy his obligations under the best interest duty?
The SOA recommendations for income protection cover 75% of Geralds income and Michelles income. The waiting period is 1 month and the benefit period is paid to age 65. Do you think the SOA adequately explains what the waiting period is, and how the benefit period works? What would you do to improve the advice on these two points?
If Gerald and Michelle did have dependants (which they dont), how do you think that should have impacted Savilles assessment of their required life and TPD cover (if at all)? Explain.
It mentions in the SOA that they shouldnt cancel their existing policies until the recommended insurance with XYZ insurance is put in place. Why is this so important?
It mentions under the section Costs and Risk of Replacing an Insurance Policy that the clients will temporarily not be paid out for suicide for a period of 13 months. In your opinion, what is the insurers intention in regard to that clause?
Compare this SOA to the sample SOA in Appendix 8 in Module 1, issued by ASIC. ASICs template shows how long an SOA can be in theory (.ie. much shorter), whilst remaining compliant. Which SOA in your opinion do you think is easier to read and digest, and why? As a client which would you prefer?
Activity 6
Case study: Statement of Advice Insurance Elements
Instructions
This is an open book assessment activity.
You are required to read this assessment and complete both Part 1 and Part 2, that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 4 hours
Background
The need to articulate your advice clearly, and comprehensively cover all the key issues for a client via a Statement of Advice (SOA) is a critical part of the advice process.
This next assessment requires you to prepare different elements of an advice document (i.e. parts of an SOA) for a fictitious couple.
IMPORTANT: This assessment has prescribed minimum word lengths that must be adhered to. Grammar, punctuation and accuracy of information delivered will form part of the assessment criteria in the context of determining competence for this assessment. The use of bullet points is allowable.
Scenario
Laura and John are married and are aged 33 and 36 years respectively.
Laura is a chemical engineer and works full-time and John is a freelance journalist.
Laura is 4 months pregnant with their first child and intends to take 6 to 12 months off work.
They have a balanced risk profile from an investment standpoint.
Laura earns a gross salary of $85,000 per annum and John currently earns income of $65,000 per annum. Johns income fluctuates due to being a self-employed freelance journalist.
Laura and John own their own home valued at $750,000 and have an associated mortgage of $450,000.
John inherited a portfolio of shares from his grandmother valued at $110,000. He chose to set up a margin lending portfolio 2 years ago. His current margin loan is valued at $50,000 and his current share portfolio is valued at $218,000.
Laura has a car valued at $30,000 and has an associated loan of $22,000.
John and Laura have combined credit card debt of $8,500.
Laura has a superannuation balance of $80,000, which is invested in a balanced fund. Note, Laura has Life Insurance and TPD Insurance (Any Occupation definition) of $120,000 held within superannuation.
John has a superannuation balance of $65,000 which is invested in a balanced fund. John has Life Insurance and TPD Insurance (Any Occupation definition) of $180,000 held within superannuation.
Your tasks:
Laura and John come to you seeking scaled advice about their insurance needs in light of their changing circumstances (i.e. their forthcoming baby).
You are required to complete elements of an SOA for Laura and John covering your insurance recommendations. Please note, you are NOT required to research actual insurance companies for this project. Your task will involve:
Summarising the clients situation
Providing scaled advice covering the amounts of insurance required
Articulating the basis for your recommendations.
Part 1
You are to document Laura and Johns Current Situation as part of the SOA documentation, using the tables below. Please add any additional notes, you believe may be relevant to their circumstances.
Personal Details
Detail Laura John
Age Occupation Employment Status (Full Time, Part Time, etc) Income Financial Details
Asset Owner Value
Total Assets Liability Owner Value
Total Liabilities Net Position (Total Assets less Liabilities) Insurance Details
Insurance Cover Owner/Insured Insured Amount
Part 2
(Minimum word length: 600 Words)
You are to document your Recommendations as part of the SOA documentation. This must be uploaded as a separate document into the Monarch Student Management System (LMS). Your recommendations should be written in paragraph form. Use the following headings (below) and remember all written recommendations should be in your own words;
Our insurance recommendations
Use the Insurance Calculator provided on the LMS (instructions and details below) to determine the recommended sums required for each client, based on the information provided. You can also make assumptions in regards to the level of income they may require if either were to pass away and the potential earning rate the clients would be comfortable with. Please include these assumptions.
Insurance types explained
In this area you are required to explain each insurance type generally.
That is, explain what each type of insurance provides and some general information about the type of cover. In a SOA this area is general information which is not specific to a client. This information could be used across the board for any client with an insurance recommendation
The basis for our recommendations
Do not assume the sample SOA provided in the Module 1 appendix provides a sufficient basis for the recommendations provided. Use the information in Module 4 course materials to clearly link the key issues and recommendations back to Laura and Johns specific scenario as part of your recommendations to demonstrate a sufficient basis.
Note when using the Insurance Calculator, please note there is not one correct answer. Rather, there are a number of possible correct answers, dependant on assumptions you make in regard to the length of time benefits are to be paid, annual income required or rate of return. Please document all assumptions made. The insurance calculator MUST be uploaded with your assignment.Insurance Calculator Instructions
This insurance needs analysis calculator considers a clients specific needs, based on their own requirements and goals if they were to pass away, become totally and permanently disabled, suffer a traumatic illness or unable to work due to illness or injury.
The inputs for the calculator can be determined through a client questionnaire and understanding a clients circumstances.
For the calculator, all inputs are indicated by a blue cell. For each type of cover the following needs are covered:
Life Cover
Repayment of 100% of total non-deductible debt
Lump sum to provide replacement income, based on:
if the client were to pass away how much income would the surviving spouse require to fund living expenses - determined as approximately 60% of current income but can be selected by the client. An amount to cover housekeeping and child care expenses for a stay at home spouse is required.
Determine how many years the client would require the income (eg. to age 65, or to life expectancy).
A reasonable earning rate (less inflation) is applied to determine the lump sum required to fund the replacement income.
An amount to cover final expenses, including funeral. This is usually $20,000, unless specified by the client.
TPD Cover
100% of total non-deductible debt
Lump sum to cover possible Renovation. This is usually $100,000, unless specified by the client.
Lump sum to cover ongoing care expenses, based on:
25% of current income (remainder of income after Income Protection payment).
Determine how many years the client would require the income (eg. to age 65, or to life expectancy).
A reasonable earning rate (less inflation) is applied to determine the lump sum required to fund the ongoing care expenses.
Trauma
Lump sum to cover Medical Expenses. This is determined to be $150,000, unless specified by the client. Please refer to the Event Costs below.
Lump sum to cover ongoing care expenses determined as 25% of current income (remainder of income after Income Protection payment) for 2 years. Calculated simply as 25% of income x 2 years.
Income Protection
Monthly benefit determined as 75% of total annual income (plus super), paid monthly.
Event Costs
Heart attack
In 1998-99 the average total expenditure per admission for acute myocardial infarction was $5,898. (Source: Australian Institute of Health and Welfare publication Health System Costs of Cardiovascular Disease in Australia 1993-94).
If these amounts are increased in line with inflation through to 2018, the individual lifetime cost would be around $20,000.
Cancer
There are more than 200 different types of cancer. You can develop cancer in any body organ. There are over 60 different body organs in the body. Source: Cancer Help UK, January 2011.
Due to the number of different types of cancer, it is impractical to research the lifetime costs of them all. Therefore, the focus is on those cancers which are the most likely to occur i.e. prostate, breast, colorectal, melanoma, lung, lymphoma and leukaemia.
Source: Cancer Incidence Projections, Australia 2002 to 2011, Australian Institute of Health and Welfare, August 2005.
The estimated lifetime costs of these ranges from under $10,000 (melanoma) to around $120,000 (leukaemia).
Sources adjusted for inflation:
(i) Australian Institute of Health & Welfare, Health System Expenditures on Cancer in Australia 2000 2001, Published May 2005.
(ii) Optimising Cancer Care in Australia, National Cancer Control Initiative February 2003.
(iii) Access Economics Cost of Cancer in NSW, April 2007
Stroke
Initial diagnostic and treatment costs for stroke total around $120,000; however, in addition there are costs of ongoing care of around $30,000. Therefore, the lifetime costs for stroke are approximately $150,000.
Source: Lifetime costs of stroke subtypes in Australia Journal, Melbourne, June 2003, adjusted for inflation.
In making a recommendation, the adviser might reasonably choose the largest amount i.e. $150,000 on the basis that it is more appropriate to have the most expensive appropriately insured, even if it results in others being potentially over-insured.
Diploma of Financial Planning
Module 4 Workplace Simulation
Submission Instructions:
Key steps that must be followed:
Please complete the Declaration of Authenticity at the bottom of this page.
Once you have completed all parts of the assessment and saved it (eg. to your desktop computer), login to the Monarch Learning Management System (LMS) to submit your assessment.
In the LMS, click on the file Submit DFP Module 4 workplace simulation in the Module 4 section of your course and upload your assessment file/s by following the prompts.
Please be sure to click Continue after clicking submit. This ensures your assessor receives notification very important!
Declaration of Understanding and Authenticity *
I have read and understood the assessment instructions provided to me in the Learning Management System.
I certify that the attached material is my original work. No other persons work has been used without due acknowledgement. I understand that the work submitted may be reproduced and/or communicated for the purpose of detecting plagiarism.
453239418734000111934318734000
Student Name*: Date:
* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by the above student declaration.
Important assessment information
Aims of this assessment
This simulated workplace assessment activity is conducted to the standard expected in the workplace in order to demonstrate consistent performance of typical activities experienced in the financial services industry.
This assessment covers the fundamentals of insurance. The focus of this assessment is to analyse a Product Disclosure Statement (PDS) from an insurance provider Comminsure owned by Commonwealth Bank. The different policy ownership options are explored, as are the options around holding insurance cover inside versus outside of superannuation (including within an SMSF). Important insurance features such as guaranteed renewability, guaranteed insurability and guaranteed agreed value are explored in the context of the Comminsure policy. Income protection is covered with a focus on options regarding waiting periods and benefit periods. Occupation classes and how they impact underwriting and premium are addressed. The Partial disability benefit within an income protection policy is explored. The important rights and responsibility of both consumer and insurance is covered in the context of Non-disclosure. The Comminsure policy is researched to understand the legal implications of knowing non-disclosure versus unknowing non-disclosure. Critical Illness (trauma) policy features are explored in the Comminsure policy. Aspects such as qualifying periods for certain conditions and specific definitions for cancer are addressed with a spotlight placed on skin cancer in terms of meeting definition requirements to receive a critical illness payout.
Marking and feedback
This assignment contains 3 assessment activities each containing specific instructions.
This particular assessment forms part of your overall assessment for the following units of competency:
FNSASICX503
FNSASICZ503
FNSASICM503
FNSFPL504
Grading for this assessment will be deemed competent or not-yet-competent in line with specified educational standards under the Australian Qualifications Framework.
What does competent mean?
These answers contain relevant and accurate information in response to the question/s with limited serious errors in fact or application. If incorrect information is contained in an answer, it must be fundamentally outweighed by the accurate information provided. This will be assessed against a marking guide provided to assessors for their determination.
What does not-yet-competent mean?
This occurs when an assessment does not meet the marking guide standards provided to assessors. These answers either do not address the question specifically, or are wrong from a legislative perspective, or are incorrectly applied. Answers that omit to provide a response to any significant issue (where multiple issues must be addressed in a question) may also be deemed not-yet-competent. Answers that have faulty reasoning, a poor standard of expression or include plagiarism may also be deemed not-yet-competent. Please note, additional information regarding Monarchs plagiarism policy is contained in the Student Information Guide which can be found here: http://www.monarch.edu.au/student-info/What happens if you are deemed not-yet-competent?
In the event you do not achieve competency by your assessor on this assessment, you will be given one more opportunity to re-submit the assessment after consultation with your Trainer/ Assessor. You will know your assessment is deemed not-yet-competent if your grade book in the Monarch LMS says NYC after you have received an email from your assessor advising your assessment has been graded.
Important: It is your responsibility to ensure your assessment resubmission addresses all areas deemed unsatisfactory by your assessor. Please note, if you are still unsuccessful in meeting competency after resubmitting your assessment, you will be required to repeat those units.
In the event that you have concerns about the assessment decision then you can refer to our Complaints & Appeals process also contained within the Student Information Guide.
Expectations from your assessor when answering different types of assessment questions
Knowledge based questions:
A knowledge based question requires you to clearly identify and cover the key subject matter areas raised in the question in full as part of the response.
Skill based questions:
Where you are asked to write as though you are speaking to a client, your answers must show your ability to:
understand your clients concerns/perspective/views
show empathy
display a professional response
explain ideas clearly and simply so your client can understand the issues
How to answer written questionsAfter each question, there is a blank text box for you to start typing your answer in, as indicated below.
Here is a sample task instruction, asking you to enter text in the box below.
Type your answer hereThe text box will expand when you are typing your answer.Unless specified, most questions require a short answer response of 1 or 2 short paragraphs.
Good luck
Finally, good luck with your learning and assessments and remember your trainers are here to assist you
Activity 1
Researching and Analysing Insurance Products: Part A
Instructions
This is an open book assessment activity.
You are required to read this assessment and answer all 11 questions that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 2 hours
IMPORTANT: Please ensure that you download the latest appendix which contains the 2018 PDS
This PDS must be used to complete all questions.
Background
As a financial adviser, you will often be authorised to recommend different insurance product providers as part of your AFSLs approved product list (APL).
Researching and analysing the different features and benefits among insurance products is an important part of the financial advisers role, in addition to comparing pure price differences alone.
Referring to Appendix 1 in your module 4 course materials, you are required to research and analyse the Comminsure insurance product range contained within the Comminsure Protection PDS.
Questions:
Referring to page 18 of the Comminsure PDS, answer the following questions:
Define what it means to be the policy owner.
Under Total Care Plan Super, if a life insured dies, to whom will the benefit be paid?
Referring to page 13 of the Comminsure PDS, who will be the policy owner of insurance:
If it is owned outside of superannuation?
If it is owned inside a Self-Managed Superannuation Fund (SMSF)?
If it is owned inside superannuation under Total Care Plan Super?
Referring to page 13 of the Comminsure PDS, who will the life insured be:
If the insurance is owned outside of superannuation?
If the insurance is owned inside a Self-Managed Superannuation Fund (SMSF)?
If the insurance is owned inside superannuation?
Refer to the definition of guaranteed renewable on page 26 of the Comminsure PDS. Now refer to the definition of guaranteed insurability option on page 39 of the Comminsure PDS.
Is the concept of guaranteed renewable and the guaranteed insurability option the same concept? If not, why not?
List four events that would allow a life insured to increase their life insurance benefit without underwriting under the guaranteed insurability option on page 39 of the Comminsure PDS.
Assume your client, Albert Einstein has two children called Alex and Mildred. Albert has a Life Care insurance policy with Comminsure for the following amount - Term Life insurance of $1,000,000. Mildred, Alberts daughter is about to start secondary school. Under the Guaranteed Insurability option on page 39 of the Comminsure PDS, explain why the maximum Albert is allowed to increase his Term Life cover by (without additional underwriting) is NOT $250,000.
Activity 2
Researching and Analysing Insurance Products: Part B
Instructions
This is an open book assessment activity.
You are required to read this assessment and answer all 10 questions that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 2 hours
Background
As a financial adviser, you will often be authorised to recommend different insurance product providers as part of your AFSLs approved product list (APL).
Researching and analysing the different features and benefits among insurance products is an important part of the financial advisers role, in addition to comparing pure price differences alone.
Referring to Appendix 1 in your module 4 course materials, you are required to research and analyse the Comminsure insurance product range contained within the Comminsure Protection PDS.
Questions
Refer to page 11 of the Comminsure PDS.
What is the minimum and maximum waiting period available under the Income Protection policy options?
One of the benefit periods available, is up to the policy anniversary date before you turn 70. Is this benefit period provided on any conditional basis, and if so what is that?
Refer to page 22-24 of the Comminsure PDS.
Under the Income Protection Guaranteed agreed value policy definition, do you need to justify your income when you make a claim? (Yes or no)
Based upon this PDS, if you are 61 years old and you apply for income protection cover, what benefit periods may you apply for, IF your occupation is classified as L-Light Manual?
Refer to page 76 of the Comminsure PDS.
Under the Partial Disability benefit option, do you get paid an Income Protection benefit if you can only work partially due to illness or accident?
Outline the formula used to determine the partial disability benefit.
Under the Non-disclosure section of all Insurance contracts, it states words to the effect that;
under the Insurance Contracts Act 1984, you have an obligation to disclose to the insurer every matter that you know, or could reasonably be expected to know, or is relevant to the insurers decision whether to accept the risk of the insurance and, if so, on what terms. This duty to disclosure also applies to a request to extend, vary or reinstate your insurance.
Refer to page 27 of the Comminsure PDS. List 4 instances in bullet point form where disclosure is not required?
Refer to page 27 of the Comminsure PDS. For insurance cover issued on or after 29th June 2014, explain the different consequences of the potential to be paid a benefit by an insurance company under the following two scenarios:
Non-disclosure by an insurance applicant that involved unknowing innocent misrepresentation or omission, whereby, had the insurer known at the time of underwriting of the correct information, the insurer wouldnt have issued the cover
Non-disclosure by an insurance applicant involving knowingly providing fraudulent information or fraudulent non-disclosure
Susan was diagnosed with malignant breast cancer 18 months ago, for which she received chemotherapy. She is now in remission. Susan decides she should take out Term Life insurance today as she has a young family and understands the gravity of her mortality after her cancer scare. Susan does not include this vital information about her cancer diagnosis on her insurance application for $600,000 of Term Life Insurance.
The insurance questionnaire specifically asks if Susan has ever been diagnosed with cancer, to which Susan answers NO. She is approved for the insurance at standard rates, based on her application information. In a devastating chain of events 6 months from today,
Susan receives the news her breast cancer has aggressively returned and metastasised into her liver and brain. She dies 5 months later (11 months from today).
If Susan had hypothetically chosen Comminsures Term Life insurance policy, would the insurer payout a benefit on Susans life insurance policy? If so why and if not, why not?
Activity 3
Researching and Analysing Insurance Products: Part C
Instructions
This is an open book assessment activity.
You are required to read this assessment and answer all 5 questions that follow.
Please type your answers in the spaces provided.
Please ensure you have read Important assessment information at the front of this assessment
Estimated time for completion of this assessment activity: 1-2 hours
Background
As a financial adviser, you will often be authorised to recommend different insurance product providers as part of your AFSLs approved product list (APL).
Researching and analysing the different features and benefits among insurance products is an important part of the financial advisers role, in addition to comparing pure price differences alone.
Referring to Appendix 1 in your module 4 course materials, you are required to research and analyse the Comminsure insurance product range contained within the Comminsure Protection PDS.
Refer to page 53 of the Comminsure PDS under Trauma Cover. Does trauma cover pay out for cancer? Explain your answer.
Refer to page 58 of the Comminsure PDS under Trauma Cover. Is there a qualifying period if an applicant is diagnosed with cancer, and if so, when does the qualifying period apply and in what circumstances?
Michael is a 47 year old father of 2 children who continues to play tennis to this day. Unfortunately, in his youth Michael did not exercise appropriate sun protection and is diagnosed by his doctor with a malignant melanoma. It is promptly surgically removed and no treatment was required. The melanoma removed was classified as less than stage T1bNOMO.
Refer to page 55 of the Comminsure PDS under Trauma Cover where it refers to cancer. Now also refer to page 148 of the medical definitions section of the Comminsure PDS where cancer is defined. If Michael had held a Comminsure Trauma Insurance policy for 2 years and he survived more than 14 days from diagnosis, would he be paid a trauma insurance benefit under this scenario, yes or no?
Assume the same fact pattern (above) except now assume Michael was diagnosed with non-melanoma skin cancer instead but the skin cancer had spread to his lungs. Assuming Michael had held a Comminsure Trauma Insurance policy for 2 years and he survived more than 14 days from diagnosis, would he be paid a trauma insurance benefit under this scenario? If yes then why; or if no then why not?
Refer to page 11 of the Comminsure PDS. For income protection insurance, describe, in your own words, the work eligibility requirements.
