Life Brokers Association, 2011
-
Upload
strictly-business-ltd -
Category
Documents
-
view
148 -
download
0
description
Transcript of Life Brokers Association, 2011
![Page 1: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/1.jpg)
Risky Regulation
or
Regulation Rewards?
![Page 2: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/2.jpg)
AGENDA: 2 distinct concepts;Risk IN Advice, &, Rewards FROM
RiskFit for Purpose?
Personal Responsibility
Third party research
Why is this appropriate?
Your analysis? Their needs?
Key DI checkpoints
New Rewards?Changing market demands
New opportunities
Manage client expectations
Best practice = $...but…
Have to think differently…
![Page 3: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/3.jpg)
Risk IN Advice
FAA & Church case highlight responsibility issues
3rd Party research a defence? (Delmenico v Brannelly & Anor;
2008) (FOS Determination 18959; 2009) (Aust)
Key regulatory test: “why is this advice appropriate?”
Identifying client needs is importantPrioritizing client needs is essentialDetermining “most likely” right solution is the art
![Page 4: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/4.jpg)
Working Example: some DI options
Scenario 1:
Salaried (PAYE) Manager earning $90,000 gross breaks his legs in a ski accident.He is unable to work at all for three months, then returns to work at one-third capacity (and pay) for a further 3 months, before returning to work in full capacity.Pre-disability Income $90,000ACC Benefits $72,000
Disclaimer!
![Page 5: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/5.jpg)
Who Pays What Monthly Benefit? (with ACC Paying $6,000/mth)
Totally Disabled (first 3 months)
Fidelity Indemnity $5,625Fidelity Agreed Value $4,125AXA Indemnity $0AXA Agreed Value $0Asteron Indemnity $0Asteron Loss of Earnings $1,125
WHY? Fidelity “Specific Injury Benefit”with no offset aims at this type of claim.
Partially Disabled
•Fidelity Indemnity $3,125•Asteron Indemnity $1,000•Asteron LOE $750•Fidelity Agreed Value $125•AXA Indemnity $0•AXA Agreed Value $0
WHY? Fidelity Indemnity has AV wording for first 6 mths of claim.
![Page 6: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/6.jpg)
Change the scenario though…
Scenario 2:
The same Salaried (PAYE) Manager earning $90,000 gross had a heart attack.He is unable to work at all for three months, then returns to work at one-third capacity (and pay) for a further 3 months, before returning to work in full capacity.Pre-disability Income $90,000ACC Benefits $0
![Page 7: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/7.jpg)
Who Pays What Monthly Benefit? (with NO ACC Payments, but $2,500/m personal earnings)
Totally Disabled (first 3 months)
AXA Indemnity $5,625Asteron Indemnity $5,625Asteron Loss of Earnings $5,625AXA Agreed Value $4,125Fidelity Indemnity $5,625Fidelity Agreed Value $4,125
WHY have AXA moved to top place?Specified Sickness turns it into a 6 month claim, regardless….
Partially Disabled
•AXA Indemnity $5,625•AXA Agreed Value $4,125•Asteron LOE $3,750•Asteron Indemnity $3,750•Fidelity Indemnity $3,125•Fidelity Agreed Value $1,625
![Page 8: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/8.jpg)
Elimination, not “selection”
Client situationClient PrioritiesBiggest risks?Strategy – AV, Ind, LOE, Hybrid3rd Party researchSupplier analysis (subjective)Portfolio “fit”Policy Features
Key definitions:– Total disability– Partial disability– Advance/arrears
payment– Sabbaticals– Reinstatements– Other Income– Offsets– Insurable income– Tax position clause
![Page 9: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/9.jpg)
A thought on Income Protection Tax Pos’n….
Agreed Value is not assessable/deductible?HISTORY: early 90’s companies sought Binding Rulings on specific products as they were new to NZ market. Rulings were product specific.BINDING RULINGS: are for a specified period, and only binding for that time. Those early binding rulings have all expired.Besides, a Binding Ruling can be withdrawn at any time.Understand that the current IRD treatment on Agreed Value is standing policy…not law, not binding, and subject to changeConclusion: it is easier for IRD to change the rules than for a client to change policies.Consequence: think A.V recommendations through carefully and review frequently. Be prepared to change positions.
![Page 10: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/10.jpg)
Rewards FROM Risk
Consider a client engagement as a project with 3 distinct components:
1. Planning
2. Implementation
1. Monitoring & Servicing
![Page 11: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/11.jpg)
How we work…
PLAN
![Page 12: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/12.jpg)
PLAN IMPLEMENTATION
How we work…
![Page 13: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/13.jpg)
PLAN IMPLEMENTATION MONITORING
How we work…
![Page 14: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/14.jpg)
PLAN IMPLEMENTATION MONITORING
$(Fee)
How we work…
![Page 15: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/15.jpg)
PLAN IMPLEMENTATION MONITORING
$(Fee)
The Client
can stop here
How we work…
![Page 16: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/16.jpg)
PLAN IMPLEMENTATION MONITORING
$(Fee)
$Commission and/or
Fee Agreement
The Client
can stop here
How we work…
![Page 17: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/17.jpg)
PLAN IMPLEMENTATION MONITORING
$(Fee)
The Client
can stop here
The Client
can stop here
How we work…
$Commission and/or
Fee Agreement
![Page 18: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/18.jpg)
PLAN IMPLEMENTATION MONITORING
$(Fee)
$Renewal
Commission +/- ?
The Client
can stop here
The Client
can stop here
$Commission and/or
Fee Agreement
The Project with client choices
![Page 19: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/19.jpg)
When implementing change….
EFFORT
little
late
TIMING
![Page 20: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/20.jpg)
EFFORT huge
little
late
TIMING
![Page 21: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/21.jpg)
EFFORT huge
little
late
early
TIMING
![Page 22: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/22.jpg)
EFFORT huge
little
late
early
TIMING
![Page 23: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/23.jpg)
Final Thought…“The Artistic Calling”
Professionala. Pertaining to a profession or calling; engaged in a
profession; engaged in an artistic calling as a means of livelihood
Professionalismn. The principles of professional persons
![Page 24: Life Brokers Association, 2011](https://reader033.fdocuments.net/reader033/viewer/2022052906/55898b2bd8b42afd4a8b4753/html5/thumbnails/24.jpg)
For further information or consultation: