9. Protection planning

Question 1

What is the general rule for quantifying the need for critical illness cover?

Answer 1

Multiple of income
Single, no dependents = 4x
Anyone else = 6x

Question 2

What is the ranking of individual finance needs? (4)

Answer 2

1. Protect dependents from loss of income or premature death expenses
2. Protect self + dependents from losing ability to earn income long-term or ongoing medical expenses
3. Protect future income; retirement planning
4. Protect/increase savings/investments

Question 3

What is regarded as the maximum budget for protection policies?

Answer 3

50% of disposable income

Question 4

How often should adviser reviews take place?

Answer 4

Annually or sooner if life event occurs

Question 5

What are the 4 factors to consider when selecting a provider?

Answer 5

Quality of service
Investment choice & performance (N/A for pure prot)
Financial strength
Cost & charges (provider + product)

Question 6

What is the free asset ratio?

Answer 6

proportion of assets not required to meet existing policyholder commitments