Development of Recommendation Flashcards
This step involves the consideration of alternative options when formulating financial strategies and the development of the comprehensive plan to effectively achieve the client’s goals and objectives.
Development of Recommendation
A method of calculating how much insurance is required by an individual/family to cover their expenses or needs.
Insurance Needs analysis
Basic Quote info
- name
- DOB
- state
- gender
- smoker stats
- occupation
- annual income
Insurance Premium factors
- age
- gender
- smoking status
- premium type
- state of health
- sports/recreational activities
- payment frequency
- stamp duty
Insurance Commission Types
Upfront (110% —10-15%)
Hybrid (70-85%—-20-25%)
Level/flat (32% —32%)
Price charged by an insurance company for providing the insurance cover.
Insurane premium
A set of questions that will be used as basis on which insurer may agree to insure the client and can be completed by filling out a form or interview over the phone
Personal statement/tele-interview
This automatically increases the insured amount to help keep up with the increases in the cost of living and represents the consumption expenditure Australian households.
Consumer Price Index (CPI)
A state/territory tax and differs between states and territories
Stamp duty
This combines multiple insurance products together and the provider pays under one type of cover and the insured amount of each remaining type of recover is reduced by the amount paid and generally has cheaper premium.
Linked cover
The provider pays one type of cover and the other types are not affected and generally has an expensive premium
Stand-alone cover
The amount of cover stays the same unless one changes it and generally the cost of it increases as one gets older.
Fixed cover
All the cover in respect of an insured member in force under the policy that is in form of units. The cost of each unit cover stays the same as you get older, but the amount of insurance you get for that cost reduces.
Unitised cover
Provides a mix of both stepped and level premiums. Under this, one will pay stepped premiums for the first 10 years, then level premiums until the insured persons turns 60, then stepped premiums until the cover ceases.
Blended premiums
A TPD definition that may include washing, dressing, feeding, control of bowel and bladder functions, getting in and out of bed, on or off a chair/toilet, moving from place to place w/o using a wheelchair.
Acitivites of Daily Living TPD
A TPD option definition related to running the family home like cleaning, shopping for food and household items, meal preparation, laundry services and caring for a child or dependant.
Home Duties TPD
The evaluation of the risk and exposures of potential clients conducted by insurance providers. It involves measuring risk exposure and determining premium that needs to be charged to insure that risk.
Underwriting
3 possible outcomes (underwriting decisions) of an insurance application
- Accepted
- Declined
- Revised/amended terms
The insurance company decides to put a loading ot exclusion on an insurance policy or revises the terms, this document is offered when the insurance company is unable to offer the standard rates
Revised/Amended terms
Underwriting Steps
Step 1: Completion of Personal Statement
Step 2: Request additional info (e.g. med reports)
Step 3: Underwriting assessment
Estimate how much premium you will pay
Quotes
Payment made by the fund to the financial adviser
Risk commissions
