Insurance Analysis And Management

Insurance Products from Comminsure

1. Nina runs a coffee shop and slips on a step at home one day and suffers a back injury. As a result she is unable to work for 3 months and incurs significant medical costs.

In this situation, Nina is qualified for specific protections as she is a working woman and along these lines the insurance arrangements that are appropriate for the woman is Trauma Insurance, Income Protection Insurance and Private Health Insurance. The claim would be undertaken as Nina acquires a lot of medical expenses. Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper

Steven, an employee, suffers from stress and is required to rest at home for 2 weeks.

In this condition, Steve may not be needing any kind of insurance policies as the individual can depend in the leave of absence and sick leave.

Alfred is knocked down by a fork lift at work and is hospitalised for 3 weeks.

In case of Alfred, he will not need any insurance policies as he can utilise his leave of absences and sick leaves and is even covered with he help of the worker’s compensation insurance. The accessibility of this insurance allows him not to purchase any other insurance policies. Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper

Linda, an employee is diagnosed with cancer incurs a significant amount of medical costs.

The case of Linda addresses the fact that, she may apply for few kinds of insurance policies that is incisive of life insurance, trauma insurance and income protection insurance. The claims that would be asked  by Linda as she is undergoing cancer and therefore has a massive amount of medical expenses which has to be  beared by her.

She dies within 6 months of the diagnoses.

As Linda expires within six months of her diagnosis, Linda’s family on behalf of her would be receiving the financial compensation amount from the life insurance company from whom the policy was purchased and would be receiving a huge amount as her income protection plan.

Peter was a self-employed plumber. Due to an accident at a construction site one day, he suffers an accident and is unable to work again as a plumber or tradesperson generally.

In this scenario, as it is seen that Peter will be unable to work as a plumber or as a tradesperson, the insurance plans that he may need to purchase are the total and permanent disability insurance and income protection insurance. Peter can then ask for claims from these plans as Peter’s permanent income has stopped because of the accident and therefore will be unable to work anymore. This recommends that there needs to be a total and permanent disability insurance and so can claim for that as well.

A restaurant that is shut down for 6 months because of a cyclone.

The situation that has been taken into consideration explains that as the restaurant is closed for six months for a cyclone the proprietor can look to buy insurance policies that includes “income protection insurance” and “Business Interruption Insurance”.  The restaurant owner then will receive claims from the “Business Interruption Insurance” as it is seen that the cyclone that occurred in the area was named by the government..

A tenant whose flat burns down.

In the scenario of a burn down of flat of a tenant, the tenant can buy a life insurance policy and even a general insurance plan as it is seen that with the assistance of the general insurance, the tenant can compensate financially for the household products that were burnt down as well.

Assessment Activity 2 Case Study General Insurance

Activity instructions to candidates

• 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

Albert recently acquired a new plane.  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.

Required:

1. Advise Albert on the risks he faces in owning the plane, whether the risks are speculative or pure, and how best he might handle each of those risks.

The plane that is owned by Albert is exposed to risk as it is seen that at the end of the business the exposure can lead to profit or loss for Albert. The risks that are pure in nature and are faced by Albert are: ·         Demise or injury of Albert, which is known as the individual risk ·         Demise or injury to the passengers denoted as the public liability ·         Damage and loss of the plane and is known to be the property risk ·         Income loss from the chartered business due to property and individual risk, which can even be explained as the consequential or the commercial risk. The precise process with the help of which  Albert can manage himself would be purchasing several insurance plans and they are given as follows:   ·         Buying insurance plans like the life insurance, trauma insurance and the income protection insurance. ·         Albert can buy property insurance and restrict himself from the chartered business. ·          A “public liability insurance” can be purchased as well in order for Albert to avoid the chartered business

To save some money, Albert decides to insure the plane for less than what it is worth. How is an insurance company likely to deal with this position in the event of a claim.

In circumstances of managing this scenario,  the insurance firms need to utilise the formula: “(Amount of insurance carried/amount of insurance required)* Amount of loss”.

This is called “Coinsurance”. The Coinsurance value which has been insured can be smaller than the overall amount due to any fluctuations in the market but need to be higher than the value that is provided or else coinsurance will be applicable.

Explain the difference between an actuary and an underwriter.

Underwriters are known as the person functioning within a company as assists in evaluating if the company should take the risks relying on the individual information of an individual or the firm who has made an application for the business. Actuary is the people who are responsible for constructing the standard benchmark price to the entire plan of insurance and publishing the price of an insurance product.  In an insurance agency, the actuaries are outward and give a rule to the cost of a insurance product and after that the underwriters of the form are allowed to take a gander at the things at a case by case premise and look at it if every one of the general population who have made application for the insurance should be sanctioned for the same or not.

Activity instructions to candidates

• 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

Craig and Beverley come to see you for the first appointment meeting.  Craig is 41 and Beverley is 39. They are married with three children aged 9, 8 and 5. Whilst Craig is the main breadwinner, Beverley has just returned to work part-time. As part of your first interview, you are trying to determine your clients’ insurance needs. 

Required:

Your task – Skills and Knowledge:

1. How could you respond to Craig who says “Beverley does not need any life insurance because I already have life insurance and income protection insurance.

This question can be answered back precisely because by looking into the background that the couple have different outlook as a person and have their individual health and life. Beverly is works as a part-time presently and hence goes for work. This generates a life risk for her. Hence, it is fundamental to buy a life insurance plan and an “income protection policy” for Beverly too because in circumstances of  Beverly’s death, Craig can gain a financial remuneration for his loss and in case Beverly loses her job, the income protection insurance plan will be giving the financial assistance that would be needed.

List 4 reasons why your clients might be reluctant to take on more life insurance?

The four reasons why the clients are unenthusiastic to buy a new  life insurance are:  1.       The life insurance product price is very expensive and hence, the client is happy with the current insurance and does not wish to invest in another. 2.       The second reason has been that it is seen that Craig (41) and Beverly (39) are young and have a healthy health and hence have the opinion that life insurance plans would not be an effective investment. They are looking to buy once they grow old. 3.       The background has given out the fact that the couple have three children and are young and hence the couple needs to earn and save money in order to pay for the future expenses of their children with regards to their studies and other costs. The costs will rise with time and hence the couple is not in the idea of buying another life insurance product and locking a huge amount of money on it. 4.       The couple gets unhappy when they hear about death and therefore they are not looking forward to purchase any other insurance.

Explain to Craig and Beverley some of the characteristics of trauma insurance.

1. 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 104-106 in the Comminsure PDS included in Appendix 1 of Module 4.

The definitions Craig would require to fulfil to get a TPD as he functions as an electrician are as per the following: Being an electrician, Craig needs accidental death cover and death cover benefit with the goal that the value of the cover shown in the schedule of the policy as expanded or diminished under the policy. This sum is the Accidental Death Cover that would be paid.  The other definition that is required is the child cover benefit plan in which his kids would be secured too and would be given money related help with instances of any setbacks or mishaps. The cover would end when the youngsters reach at 18 years old years. Craig can even be given a flexi-linked policy plan where his life safeguarded in accordance to the Life Care applies under the primary plan and flexi-linked rider cover is applicable under the flexi-connected strategy. The Life Care for this life insured is appeared as ‘flexi-linked’ in the policy schedule plan. For flexi-linked applications, the essential Life Care and flexi-linked rider cover must be applicable to a similar life insured Flexi-linked TPD cover can even be clarified where the TPD Cover applying to the flexi-linked life insured under the flexi-linked policy, being spread to which flexi-linking is applicable.  Flexi-linked TPD Cover incorporates an advantage payable for fractional and perpetual disability, the “TPD Cover Serious Hardship Booster” benefit and the “TPD Cover Loyalty Bonus” benefit under the flexi-linked arrangement. Craig can even name a nominee where after his demise the candidate can assert for the remuneration amount from the firm and subsequently maintaining the financial stability of the family.

As a consequence of your interview, Craig and Beverley are considering taking out some insurance for Beverley. Prepare a question you could ask them to determine whether they are ready to proceed to the next step in the process of acquiring some/more life insurance. For example, “…can you see why that could be an issue for you?”

The question which is asked to the couple is: Have you gained knowledge of the features of an insurance product and have you understood that as an electrician there are numerous risks and therefore are you looking to purchase the products?

How would you explain to any client why only having term life insurance may be insufficient?

The Maintenance of term life insurance may be inadequate as the term life insurance only takes care of the financial compensation that has to be paid due to the death. However, as Craig is an electrician he can face risks that may create “total and permanent disablement” and thus may lose the capability to earn income. Hence, it is necessary to purchase an income protection insurance along with the trauma or total and permanent disablement insurance so that in circumstances of such risks the client can recover from such scenarios and can maintain their present lifestyle.

How often do you think it would be appropriate to review Craig and Beverley’s personal insurance? Explain why.

It is vital to assess the individual insurance of Craig and Beverly on a frequent basis as it is seen that Beverly has a part time job and Craig works as an electrician. Hence, there may be scenarios that may alter the couple’s lifestyle. Hence, assessment of their personal insurance is important so that in times of accidents the insurance products can be altered accordingly and can add in new features in their insurance plans. The key reasons for reviewing the insurances are:  Transformations in the lifestyle Transformations in the income Changes in health Family circumstances may change Any loan has been taken by the couple

In your annual review many years later (after Craig and Beverley 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?

Insurance assessment is vital prior to taking $1.2 million as the financial companies can look at the extent of premium that the client pay and the sum amount that is insured by Craig. For the fact of taking a loan, it is mandatory to provide a security and hence it is seen that if demanded the sum insured value can be useful as a security for the amount that will be taken as loan.

Determining Insurance Needs of Clients

Provide a list of 4 hypothetical circumstances which would justify a review of insurance cover for Craig and Beverley?

The four hypothetical situations  for the rationale of the assessment of the insurance cover are: : 1.       Income change for the couple 2.       Alterations in the couple’s lifestyle 3.       In case they look to take a loan 4.       In case the insurance product of the client has not been evaluated for a long time.

Three years after first sitting down with Craig and Beverley (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, Beverley 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.

1. If Craig died 6 days after his stroke, how much insurance would Beverley and the children receive under the policies?

They will not get any money now but would attain the entire money after 14 days that was sum insured with the trauma insurance coverage.

If Craig died 43 days after his stroke, how much insurance would Beverley and the children receive under the policies?

  Beverly his wife and his children would gain the entire amount as it is observed that their premium is paid fully and it is said that they would be provided with entire compensation only after 14 days after the incident.

• 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?

In this scenario, Craig will be qualified for the “trauma insurance coverage” and will be receiving the money either in full or would be paid according to the medical expenses that taken place

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)?

The buyback policy is possible by meeting an agent and then gaining knowledge of the terms and policies related to the payment of the insurance firm and then filling up the required forms so that further steps can be taken to buyback the policy.

Activity instructions to candidates

• 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.

Required:

Your task – Skills and Knowledge:

1. Would income protection insurance be appropriate for John to consider? Why?

Income protection insurance is a product that aids in dealing with the costs in case the insurer can’t work due to affliction or damage. The income protection insurance is otherwise called salary continuance insurance. This protection helps in supplanting the salary lost so it imperative for a person to consider this who is completely depended on that income. The income protection insurance is suited for person who are independently employed, entrepreneurs and experts depending vigorously on the capacity to work. For this situation, Mary and John are in their mid-thirties. The John is the only income member and they have children of ages 7 and 10. Along these lines, on breaking down their circumstance one might say that it would be suitable for John to have income protection insurance.

Would income protection insurance be appropriate for Mary to consider? Why

The Income protection Insurance is not ideal for Mary. The feature of income protection insurance is to compensate for the income lost. In this case, Mary is not working so income protection insurance is not ideal for her.

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?The income protection plan offers 75% of the gross wages. The maximum period the insurance is offered is 2 years or till the age of sixty. In this scenario, if John is unable to work he would gain a value (54000X75%)= 40500.

What types of insurance should Mary consider?

In case of medical treatment and sickness, Mary will need to pay the bills. Hence, it is recommended that it will be ideal for Mary to take a private health insurance cover.

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.

The extra insurance of income protection by John will enhance the cash out flow more. Hence, it is recommended that John should buy a life insurance that provides additionally  an income protection cover. In this manner, expenses will fall and cash flow could be maintained.

Managing Risks using Various Insurance Plans

Activity instructions to candidates

• 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 

Simulation Exercise

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 SOA’s. 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.

Required:

Questions about the insurance recommendations

1. 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 interests duty?
2. The SOA recommendations for income protection cover 75% of Gerald’s income and Michelle’s 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 don’t), how do you think that should have impacted Saville’s assessment of their required life and TPD cover (if at all)? Explain.

1. It mentions in the SOA that they shouldn’t cancel their existing policies until the recommended insurance with XYZ insurance is put in place. Why is this so important?

The new policy needs certain approval time.  The insured will gain the cover if the current policy is sanctioned therefore the old policy should need not be cancelled as the person will not have any insurance coverage for a specific time period.

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 insurer’s intention in regard to that clause?

The insurer will not have to pay for any claim that comes from suicide of a person. The actual goal of this clause is to diminish the tendency of giving financial assistance to the family with the help of insurance by taking their own life.

Compare this SOA to the sample SOA in Appendix 8 in Module 1, issued by ASIC. ASIC’s template show’s 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 instructions to candidates

• This is an open book assessment activity.
• You are required to read this assessment and answer both 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: 4 hoursThe 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 sparingly.

Background Information

• Laura and John live in a long-term de facto relationship and are 33 and 36 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. Laura intends to take at least 2 years off work in a home-maker role not earning income to care for her child before negotiating a re-entry into the workforce with her employer.
• They have a balanced risk profile from an investment standpoint.
• Laura earns a gross salary of $85,000 and John is expected to earn a gross income of $53,000. Note: John’s salary has varied over the previous three years as follows ($66,000 – 3 years ago, $82,000 – 2 years ago, $51,000 1 year ago).
• Laura and John rent their house and pay $640 per calendar week on rent.
• John inherited a portfolio of shares from his grandmother valued at $320,000. He chose to set up a margin lending portfolio 2 years ago. His current margin loan is valued at $190,000 and his current share portfolio is valued at $529,000.
• Laura has a personal loan on a car valued at $22,000
• John and Laura have combined credit card debt of $13,000
• Laura has a superannuation balance of $171,000 which is invested in a balanced fund. Note, Laura has Life Insurance and TPD Insurance (Any Occupation definition) of $200,000 heldwithin superannuation.
• John has a superannuation balance of $35,000 which is invested in a balanced fund.
• John has existing insurance cover outside of superannuation of:
  • Greatcover Term Life insurance $350,000 (Stand Alone)
• Laura has existing insurance cover outside of superannuation of:
  • AAA Term Life Insurance $100,000 (Stand Alone)
  • Easycover Term Life Insurance $210,000
  • EasycoverTPD (Own Occupation definition) Insurance $210,000 (note: Bundled with Easycover Term Life Insurance)

Required:

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 client’s situation
• Providing scaled advice covering the amounts of insurance required
• Articulating the basis for your recommendations. 

Assessment – Part 1

(Minimum word length – 100 words).

You are to document Laura and John’s “Current Situation” as part of the SOA documentation. This should be a succinct summary, and no more than three paragraphs based on the above information (not in bullet points).

The Laura and John are in a relationship. Then present age of Laura is aged 33 and she is works as a chemical engineer in a full time manner. She earns a salary of $85000. One the other hand John is of age 36 and works as a freelance journalist. It is anticipated that earns an income of $53000 from freelance journalism. John as a freelancer is seen to be that his salary is variable widely within a year. Laura is pregnant presently so she is looking to take an off for 2 year before reentering the job. On having a meeting with respect to the investment associated with both of them it could opine that they have a balanced risk profile. The John has share portfolio that he has received from his grandmother. They live presently in a rented house. On evaluating their liability, it is seen that Laura has a car loan. John and Laura together have credit card debt of $13000. The Laura has balance in superannuation that is invested in the balanced funds.  She has a life insurance and “TDP insurance” cover that is within the superannuation. Laura has several other insurance externally to the super fund that includes “TDP insurance”. John has a superannuation fund which is invested and has life insurance outside superannuation.

Assessment – 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 (note: bullet points if used should be used sparingly). Use the following headings (below) and remember all written recommendations should be in your own words;

• Our insurance recommendations

Refer to points 1 – 5 below when making your recommendations. You should address each of these issues in your answer.

• 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

Refer to point 6 below when you provide a basis for your recommendations.

Important information for this assessment:

Note – when using the income capitalisation approach, please note there is NO one correct answer.  Rather, there are many possible correct answers. Questions 1 and 2 (below)require you to comment on the difficulties involved in trying to determine how much insurance is appropriate. A good answer will identify the main issues to consider as well as indicating any challenges (or opinions) you have when attempting to determine the appropriate amount of insurance.

1. Use the “Income capitalisation approach” to determine the recommended sums insured for Life and TPD Insurance. You can use a discount rate for a balanced investor of 4%. Show your workings and any assumptions you make. Combine all assets between Laura and John for this purpose. Discuss the difficulty with Laura’s changing work circumstances. In determining how much insurance they require take note of their existing insurance cover.
2. Explain any issues that arise when using the “Income capitalisation approach” to determine the required Life and TPD Insurance.
3. Ensure you provide advice across Life, TPD, Trauma and Income Protection. Explain if they are (or are not) applicable to your clients. For the purposes of a recommended Trauma insurance, please recommend a sum of $200,000 each to provide for their estimated future medical expenses.
4. You must address the issue of Laura’s income status changing with the impending birth of their first child. Explain in the context of the lump sum amount you determine they both require for Life Insurance and TPD purposes, what TPD definitions would apply both now and after becoming a home-maker, Income Protection insurance and anything else deemed relevant. Include any assumptions you make, and provide a basis for such assumptions used.
5. Given cash flow may well become a concern for the couple after moving to one income (certainly in the short term) after Laura gives birth, provide recommendations that reflect a solution to that genuine concern.
6. 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 John’s specific scenario as part of your recommendations to demonstrate a sufficient basis.

Activity instructions to candidates

• This is an open book assessment activity.
• You are required to read this assessment and answer both 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

Question 1

Refer to the information provided to you in the previous activity –  (Activity 6) about Laura and John.

Assume now that Laura and John did not rent, rather they owned a house worth $980,000 and had an associated mortgage of $335,000. Assume they have a combined gross income of $90,000 and want to retire at age 60

Re-calculate John and Laura’s Life Insurance and TPD lump-sum requirements using;

1. The Income capitalisation approach

1. Age to retirement lump sum approach

Laura=  (85000X 27)X0.66= 1514700 John= (53000X24)X0.66= 839520

What is the main advantage and disadvantage of using the ‘goals’ approach compared to the alternative ‘age to retirement lump sum’ and ‘income capitalisation’ approaches when determining a client’s required Life and TPD insurance?

The advantage of goal approach in comparison to other two approaches are: •              It is a personalised approach than the other two; •              In this process the insurance can be customised according to the personal demand of the client; •              In this process the input relevance can be understood easily

Question 2

(Minimum word length: 200 Words)

If your client doesn’t have dependants, explain which insurance out of Life and TPD Insurance is still very important and why, and which insurance out of Life and TPD Insurance is less important and why? In your answer, explain why taking out insurance that has lesser importance, might still be worthwhile for future reasons (e.g. changes in personal circumstances) in the context of health and guaranteed renewability.

The TDP and life insurance is essential. If the client do not possess a dependent then again the income protection insurance is vital as it saves the household income. On the other hand, in this scenario, trauma insurance is not essential, as it would be covered by the health insurance. The significance of an insurance are: •              To safeguard the loved ones and family from certain emergencies; •              It assists in creating inheritance. The insured can pass on the advantage of an amount insured to the beneficiary. •              It generates financial security •              It brings in peace of mind The insurance that is presently seen looks to be of no worth in some point of time can become beneficial at a latter phase when the situation changes and there is a need of insurance cover.