RISK ADVICE AND INSURANCE

Transcription

1 RISK ADVICE AND INSURANCE Study guide: First edition Risk Advice and Insurance is designed to provide you with insurance and risk-advice knowledge and skills that are applicable to the Australian insurance industry and regulatory environment. On completion of this subject, you should be able to: understand the value of financial planning in the area of risk advice and insurance explain the purpose of general, life and disability insurances explain the purpose of business insurance understand the process of insurance underwriting and claims recommend appropriate insurance ownership for a client determine the tax implications for various insurance types and ownership structures apply the financial advice process to provide appropriate risk and insurance advice. Exam structure The Risk Advice and Insurance exam is comprised of a combination of multiple-choice and extended-response questions. Subject content The subject is divided into six modules. A brief outline of each module is provided below. The weighting column in the following table provides an indication of the emphasis placed on each module in the exam, while the proportion of study time column is a guide for you to allocate your study time for each module. Module Recommended proportion of study time (%) Weighting (%) Recommended study schedule I. Introduction to risk advice and insurance Week 1 2. Life and disability insurance Week 2 3. General and business insurance Week 3 4. Underwriting and claims Week 4, 5

2 5. Insurance ownership and taxation Week 6, 7 6. Providing insurance advice Week 8, 9 Module 01 - Introduction to risk advice and insurance describe the concept of risk and the risk classifications; identify different categories of risk and their associated insurance types; examine the roles of insurance market participants, regulatory bodies and their interactions; apply legislation and codes of conduct to protect insurance market participants; identify the key obligations of a financial adviser when providing insurance advice to a client; and apply the licensing requirements for various insurance advice areas. Risk Insurance Market participants Regulation and legislation Providing risk and insurance advice Module 02 - Life and disability insurance identify the features of life and disability insurance products; evaluate the use of life insurance products; evaluate the use of total and permanent disablement insurance products; evaluate the use of income protection insurance products; and evaluate the use of trauma insurance products. Overview of life and disability insurance Life and disability insurance statistics Definition of a life policy Guaranteed renewable Cancelling a life policy Life Insurance

3 Term life insurance Traditional or permanent insurance contracts Disability insurances Group life insurance Module 03 - General and business insurance identify the features of general insurance and the role of the specialist; evaluate the use of personal general insurance; evaluate the use of commercial general insurance; determine appropriate general insurance cover for a particular client; and evaluate the use of insurance to support a buy-sell agreement. General insurance and the specialist Personal general insurance Commercial general insurance Business succession strategies Module 04 Underwriting and claims determine the factors influencing underwriting and the outcomes; evaluate the outcomes of underwriting; determine the factors influencing a claim s payout; and analyse the role of the adviser in the process of underwriting. Underwriting factors What is underwriting? Underwriting outcomes Acceptance, rejection and exclusions Calculating a premium

4 Claiming insurance Claims process Claims issues Role of the adviser Applying for insurance Assisting with a claim Module 05 Insurance ownership and taxation evaluate insurance ownership options available for a particular client; analyse the tax implications of various insurance ownership options; examine the tax implications of key person insurance policies; and assess the impact of owning insurance within a superannuation fund. Insurance ownership options Policy ownership Ownership structures Advice regarding ownership Self-owned insurance Self-owned life insurance Self-owned total and permanent disability and trauma insurances Self-owned income protection insurance Employer-paid, self-owned insurance Employer-paid, self-owned life insurance Employer-paid, self-owned total and permanent disability Employer-paid, self-owned income protection insurance Employer-paid, employer-owned insurance Employment termination payments

5 Key person insurance Scope of advice Insurance that funds a buy sell agreement Ownership options and considerations Insurance within superannuation Employer-paid, employer-owned insurance within superannuation Life insurance within superannuation Total and permanent disability insurance within superannuation Income protection insurance within superannuation Trauma insurance within superannuation Special considerations for self-managed superannuation funds Insurance-only superannuation products Linking Module 06 Providing insurance advice perform a needs analysis to determine the risk a client may face; analyse a client s given situation and recommend appropriate insurance cover; explain the risks and benefits of a particular risk management recommendation; assess the impact of insurance recommendations on a client s tax and cash flow position; apply negotiation skills to address any concerns a client has with the risk management recommendations; design an action plan that specifies the roles, tasks and timelines for implementing insurance advice; and identify factors that may trigger the need for an ongoing review on the risk management recommendation. Insurance advice within the financial planning process Step 1: Initial engagement Step 2: Gathering information Step 3: Developing appropriate strategies and products Step 4: Preparing the advice documents Step 5: Presenting the advice Step 6: Implementing the advice Step 7: Ongoing service and review