Plagiarism Statement: Life Insurance FNSASICX503A

Elements to be assessed To achieve this objective, you will need to demonstrate your ability to: Establish relationship with client and identify client’s objectives, needs and financial situation; Analyse client’s objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions; Present appropriate strategies and solutions to client and negotiate a financial plan, policy or transaction, and Agree the plan, policy or transaction and complete documentation; and Provide ongoing service where requested by client.

Insurance 1 of 36
Provide advice in Life Insurance
FNSASICX503A
Your details:
Name:
Address:
Phone:
Company name
Email:
Your assessment task
Keep a copy of your assessment task for a period of 12 months.
Submit your assessment to our Education Team via [e-mail]
Plagiarism Statement
All assessments must be your own work and not a result of plagiarism or collaboration
with other students or workmates.
Assessment
The pass mark is 70% for each element.
If you do not achieve this, you will receive feedback via your email address and be asked
to resubmit your assessment for a second marking.
Assignments will not be returned to you.
Task Assessments Elements Target
Mark
Pass
Mark
Actual
Mark
1 Establish relationship with client and identify client’s objectives,
needs and financial situation. FNSASICX503A.1 79 55
2 Analyse client’s objectives, needs, financial situation and risk
profile to develop appropriate strategies and solutions. FNSASICX503A.2 100 70
3 Present appropriate strategies and solutions to client and
negotiate a financial plan, policy or transaction. FNSASICX503A.3 58 41
4 Agree the plan, policy or transaction and complete
documentation FNSASICX503A.4 32 22
5 Provide ongoing service where requested by client. FNSASICX503A.5 24 17
Total 293 205
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Insurance 2 of 36
Introduction Name: ____________________
Objective The objective of this Assessment Task is to assess that you have the skills
and knowledge required to provide Life Insurance advice to client.
Elements to
be assessed
To achieve this objective, you will need to demonstrate your ability to:
 Establish relationship with client and identify client’s objectives, needs and
financial situation;
 Analyse client’s objectives, needs, financial situation and risk profile to
develop appropriate strategies and solutions;
 Present appropriate strategies and solutions to client and negotiate a
financial plan, policy or transaction, and
 Agree the plan, policy or transaction and complete documentation; and
 Provide ongoing service where requested by client.
The assessment tasks in this assessment will allow you to demonstrate your
knowledge and skills in relation to these elements.
Assessment
process
Start by:
1. Reading the Assessment Tasks in this document,
2. Type your answers to the assessment tasks into this template document
(hand-written answers are not accepted)
3. Submit your completed document by emailing it to
[e-mail]
Don’t forget to keep a copy and retain it for 12 months.
Need help? If you have any questions or would like to request a digital copy of this
assessment task, please email the Mentor Support Team at
[e-mail]
Related
Assessments
Upon successful completion of this assessment, students who have enrolled to
provide personal advice in Life Insurance will be awarded the following Unit
Competencies:
 FNSASICX503A Provide advice in life insurance
 FNSINC501A Conduct product research to support recommendations
 FNSIAD501A Provide appropriate services, advice and products to clients
 FNSCUS505A Determine client requirements and expectations
 FNSCUS506A Record and implement client instructions
Those enrolled to provide general advice in Life Insurance will be awarded the
following Unit Competency:
 FNSIAD301A Provide general advice on financial products and services
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Insurance 3 of 36
Assessment Task 1 Name: ____________________
1.0 Establish
relationship
with client
FNSASICX503A.1
Once the initial interview with a potential or new client is arranged1, the first
step in the financial services advice process is to establish a relationship
with the client and identify their objectives, needs and financial situation.
This will require that:
1. The financial products and services knowledge level of the client is
established
2. Enquiries in relation to Life Insurance products and services are
responded to by explaining the range of products and services available
and their relevant fee and charging methodology
3. The client is informed of the role of the adviser and the licensee or
principal responsible for the adviser’s conduct including procedures for
complaints handling and the circumstances in which they should be
engaged
4. The client’s personal, financial and business details are obtained and their
needs identified by encouraging expression of their objectives and goals
5. The product risk profile of the client and their expectations of cash flow
and relevant taxation obligations are established.
In preparing your answers, you should refer to the Life Insurance Case Study,
and for the purposes of the assessment, assume that the initial interview
incorporates the fact-finding interview.
(79 Marks)
1 This element may also apply to established clients whose circumstances have changed and where you wish to
provided ‘subsequent’ advice, as part of providing an ongoing service.
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Insurance 4 of 36
Assessment Task 1.1 Name: ____________________
1.1 Establish a
relationship
with the client
FNSASICX503A.1.1
FNSASICX503A.1.2
FNSASICX503A.1.3
You are preparing for the initial (and fact finding) interview with the client.
This Assessment Task requires you to consider:
 The documentation you can provide the client prior to, or at the beginning
of, the interview.
 What you might ask the client to do to prepare for the first interview.
 Strategies you will use to build rapport during the interview process
 What aspects of the FSG you will explain to the client.
Preparation is the key to a successful outcome.
(a) Give some thought to the sort of things you would cover. Include any legal
requirements and other documentation you can provide which may be helpful in the
interview.
No Type your answers below Mark
1. The first step is to introduce myself appropriately in front of the client and also introduce the
company which I am representing and at the same time enter in conversation with the client. / 1
2. Provide them with a FSG and Privacy Statement / 1
3. I would be asking their specific needs, objectives and financial requirements and what are they
expecting from the product / 1
4. I would update the clients knowledge base regarding life insurance products and also ask them to
sign relevant deeds and papers and also make a risk assessment for them. / 1
5. Provide an Authority to Proceed Form ready to be signed / 1
(b) What would you ask these clients to prepare and bring to the initial interview?
No Type your answers below Mark
1. Recent bank statements, existing insurances, cheque book, credit cards / 1
2. Tax return slips, statement of the clients in recent years / 1
3. Any loan deed entered by the client which is active and such can include home loans, car loans or
any other kind of loans / 1
4. Any other insurance policy which the clients may have and such can include medical insurance or
life insurance policies. / 1
5. Any investments which are made by the client during the period or in the past or any portfolio made
by the client or any superannuation contribution. / 1
Sub-total /10
Continued
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Insurance 5 of 36
Assessment Task 1.1, continued Name: ____________________
(c) To establish a relationship with the client, what strategies or approaches might you
use to build rapport and trust during the interview process?
No Type your answers below Mark
1. The questions asked would be informal in nature and the same can be associated with the work,
personal life of the client. / 1
2. Ask about the hobbies of the client and bring out a common interest point which can be sports, book
reading, boating or adventure. / 1
3. Ask the client about his future endeavors and provide a positive view of the plan and if possible,
make certain suggestions to further improve the scope of the plan. / 1
4. Assure the client that the company I have dealt with such a situation in the past and have helped out
many clients and would do so for the present client as well / 1
5. Listen carefully to what are the issues, concerns and expectation of the clients and address every
feedback appropriately for the client. / 1
(d) What are the four points you must cover when presenting an FSG?
FNSASICX503A.1.1
No Type your answers below Mark
1. Make an introduction to the product or services of dealer group along with their attributes to the
clients. / 1
2. Explain all fees and charges, particularly any commissions or any other benefits that I might receive
from product suppliers / 1
3. Explain any relationships that might influence the range of products and services being provided,
e.g. links with profit providers. / 1
4. Explain the process about customer complaint resolutions and give them contact details for the
ombudsman / 1
(e) What types of personal insurance strategies/products do you expect to provide advice
on?
FNSASICX503A.1.2
No Type your answers below Mark
1. Income Protection / 1
2. Trauma / 1
3. Life Insurance / 1
4. Total Permanent Disability / 1
Sub-total /13
Continued
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Insurance 6 of 36
Assessment Task 1.1, continued Name: ____________________
(f) What are the benefits of explaining these products and strategies to your clients?
FNSASICX503A.1.1 and 1.2 (a)
No Type your answers below Mark
1. On the basis of the objectives and goals which are set out by the client, I am able to appropriately
explain the features of the products point out how such products can lead to fulfillment of the
objectives of the client. The client would be able to take his decisions appropriately due to the
discussion regarding the product. / 1
2. Due to expertise and knowledge in the field I would be able to provide the clients with appropriate
advise regarding which product would give the maximum benefits and meet the expectations of the
clients. / 1
3. This helps the client by not being overloaded with excess information and getting mixed up. / 1
(g) List the different types of fees you could charge these clients.
FNSASICX503A.1.2 (b)
No Type your answers below Mark
1. Commissions / 1
2. Hourly rate / 1
3. Referral Fees / 1
(h) What are the benefits of explaining these fees to the clients?
FNSASICX503A.1.2 (b)
No Type your answers below Mark
1. Have a clear contract and explaining the fees structure would help in building trust / 1
2. The cost element of services would become known to the client / 1
3. Client would be explained the breakup of fees charged which would ensure that there is fairness in
the approach / 1
4. Conforms with rules and regulations set under the Corporations Act Documentary Requirements,
and ASIC / 1
(i) Outline the three steps your clients should take if they have a complaint or dispute
prior to contacting the ASIC.
FNSASICX503A.1.3 (b)
No Type your answers below Mark
1. They can contact the company to make a formal complaint to the free internal disputes resolution
process / 1
2. Contact the disputes Officer / 1
3. If they are still not happy with the result within the first 45 days, they can refer it to Insurance
Ombudsman / 1
Sub-total / 13
Continued
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Insurance 7 of 36
Assessment Task 1.2 Name: ____________________
1.2 Identify
your client’s
objectives,
needs and
financial
situation
FNSASICX503A.1.1
FNSASICX503A.1.4
FNSASICX503A.1.5
You can now begin identifying the clients objectives, needs and financial
situation.
This Assessment Task requires that the:
 Client’s personal, financial and business details are obtained and their
needs identified by encouraging expression of their objectives and goals
 Product risk profile of the client and their expectations of cash flow and
relevant taxation obligations are established.
Attention to detail, methodical enquiry and documentation are required.
(a) What techniques or tools could you use to gather information about your clients?
No Type your answers below Mark
1. Ask open ended questions Who, What ,when, where, why / 1
2. Client’s Personal details and what insurances they have in place, Mortgage, Loans, Income
inheritances, Bank Accounts. / 1
3. Bank Statements from their Business Expenses, Loans, Turn over, etc. / 1
4. Fact Find Document / 1
(b) Using the information about the client provided in the case study, answer the fact
finding questions in the table below about the client’s personal and business details.
FNSASICX503A.1.4 (a)
No Fact Finding Questions Type your answers below Mark
1. What are the clients’
names and their ages?
Bill Smith 42 Mary Smith 40
/ 1
2. What are the names and
ages of the clients’
dependants?
Harry Smith 8 Diana Smith 4
/ 1
3. What are the clients’
occupations or
employment status?
Bill is a partner in a heavy engineering business
Mary works part time as a fitness instructor.
/ 1
4. What are the clients’
career or business plans
for the future?
Bill would like to investigate ways to grow the company and increase
profits
Mary intends to return to full time employment when her daughter goes
to primary school. She will use the extra money to pay for the children’s’
private school fees for their secondary education. / 1
5. Do the clients have any
health issues? What is
their health status?
No, both are in good health
/ 1
6. Are the client’s smokers
or non-smokers?
Non Smokers
/ 1
Sub-total /10
Continued
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Insurance 8 of 36
Assessment Task 1.2 Name: ____________________
(c) Using the information about the client provided in the case study, answer the fact
finding questions in the table below about the client’s personal and financial details.
FNSASICX503A.1.4 (a)
No Fact Finding Questions Type your answers below Mark
1. What Life or other
insurance arrangements do
the clients have?
Neither have any life insurances in place. They have General
insurance for their home and contents ,cars and business
/ 2
2. Do the clients have any
Wills and Powers of
Attorney?
No
/ 1
3. What are the clients’ net
Assets & liabilities?
Home Joint $600,000.00 Bank Account $ 15,000.00
Liability $150,000.00 ABC Super Fund $ 120,000.00
Bill
Cars $ 40,000.00 DEF Super Fund $ 27,000.00
Mary
Contents $ 50,000.00
Total Net Assets $ 702,000.00 / 1
4. What are the clients’
current incomes and
expenses?
Bill $100,000 Mary $ 30,000 Joint Expenses $70,000 Per Yr.
/ 2
5. What assets did the clients
recently acquire?
Piano, Computer, Diamond and Bracelet
/ 1
(d) What are the client’s objectives and goals?
FNSASICX503A.1.4 (b)
No Fact Finding Questions Type your answers below Mark
1. Long-term goals? To have the right insurances in place to meet their future needs
/ 1
2. Medium-term goals? Bill wants to grow his business to increase profits.
Mary wants to return to work full time in order to pay for her children to
attend a private secondary school. / 1
3. Short-term goals? To have personal insurances in place as they don’t have any at all.
Draw up wills and put Power of Attorneys into place / 1
(e) Using the information about the client provided in the case study, answer in the table
below the questions relating to the clients expectations of cash flow?
FNSASICX503A.1.5
No Questions Type your answers below Mark
1. How do the clients feel about the
returns on their superannuation?
Bill is concerned as he is unsure about their future returns
and fees. / 1
2. What are the clients’ expectations
with regards to super returns?
They are not sure about their past returns
/ 1
3. What concerns do the clients have
about their current investments?
They have no other investments
/ 1
Sub-total / 13
Continued
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Insurance 9 of 36
Assessment Task 1.2, continued Name: ____________________
(f) Do you think that the clients are active or passive investors? Why?
FNSASICX503A.1.5 (i) (a)
No Questions Type your answers below Mark
1. Are the clients active or passive
investors?
Passive
/ 1
2. Why? They have confirmed that they are not sure about anything
to do with their super fund and don’t really know about the
past returns. / 1
(g) Based on your answers in the table above, what do you think is the product risk
profile of the clients and why?
FNSASICX503A.1.5 (ii) (b)
No Risk Profile Question Type your answers below Mark
1. What are the clients’ risk profiles? Based on their answers both Clients are balanced risked
takers.
/ 1
2. Why? Neither has ever shown an interest in their supers other
than their necessary payments. It says Bill is a risk taker
but only in personal insurances. / 2
(h) Using the information about the client provided in the case study, answer in the table
below the client’s current relevant taxation obligations.
Refer to www.taxcalc.com.au (2011/2012 financial year) for assistance.
FNSASICX503A.1.4 (f)
No Taxation Obligations Calculations Mark
1. What is the gross (pre-tax) income
for each client?
Bill - $100,000 / Mary $30,000
/ 1
2. What is the total tax payable by each
of them? (include medicare and flood
levy and applicable offsets)
Bill: Mary:
Income Tax 24,950 Income Tax 3600
Medicare Levy 1,500 Medicare Levy 450
Flood Levy 250 Flood Levy -1500
/ 1
3. What is Bill and Mary’s surplus
income?
Bill – $73,300 Mary - $27450
/ 1
Sub-total / 8
Continued
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Insurance 10 of 36
Assessment Task 1.2, continued Name: ____________________
(i) Write down at least 2 open ended questions that you would use in the initial interview
to increase your understanding of your client’s goals and objectives, which are not
included in the Fact Finder.
Use open-ended questions start with What, How, When, Why and Where.
FNSASICX503A.1.5 (ii) (d)
No Line of Questioning Open Ended Questions Mark
1. Cash flow needs?
(E.g. Do you have any known major
expenses coming up?)
Do you plan to go on holiday this year?
You mentioned Mary’s mother passed away recently, are
there any funeral expenses or legal fees outstanding? / 2
2. School goals and objectives?
(eg. In what year will Harry start
secondary school?)
Will your children go on to University?
What sports are they interested in/ are they involved in any
out of School activities etc.?
/ 2
3. Other issues or concerns they
might have?
(eg. What are your current plans
if something goes wrong?)
If Mary were to be made redundant do you have a backup
plan in place?
Do you have any other family members you have to look
after? / 2
4. Current assets?
(eg. Are they happy with the
returns you are getting on the
funds in the bank account?)
Would you be willing to take more risk If you could get a
higher return on your Superannuation?
Have you thought about investing your current cash into
other forms?
/ 2
(j) After the initial interview, what documentation would you ensure is in the client file?
FNSASICX503A.1.3
No Client File Documentation Mark
1. Conformation of Appointment Letter, Financial Services Guide, list of financial goals and
objectives / 1
2. Statement acknowledging FSC has been presented detailing the time and date of the
presentation / 1
3. Signed Authorisations for provision of information from third parties, Copy of Fact Finder
with a signed acknowledgement of the accuracy of the information contained in it.
Signed copy of the Client service agreement, Signed Authority to Precede letter. / 1
4. Client file note of any further research to be carried out / 1
Sub-total / 12
Total / 79
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Insurance 11 of 36
Assessment Task 2 Name: ____________________
2.0 Analyse
client’s
objectives,
needs,
financial
situation and
risk profile to
develop
appropriate
strategies
and solutions
FNSASICX503A.2
The next step in the financial services advice process is to analyse client's
objectives, needs, financial situation and risk profile to develop appropriate
strategies and solutions.
This will require that:
1. An assessment of client’s needs is undertaken, utilising all information
gathered and taking into account client’s product expectations and specific
needs
2. Client is consulted throughout the analysis for further clarification where
necessary
3. The need for specialist advice is analysed and the client is referred to an
appropriate adviser for higher level or specialist advice if required
4. Product risk profile of the client is assessed and agreed demonstrating
understanding of the ASIC identified generic and specialist knowledge
relevant to the products being offered
5. An appropriate strategy to provide for identified needs and outcomes is
determined from analysis of products, client risk profile and assessment of
their needs
6. Relevant research, analysis and product modeling is conducted and an
appropriate solution, plan, policy or transaction drafted for presentation to
the client.
(100 Marks)
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Insurance 12 of 36
Assessment Task 2.1 Name: ____________________
2.1 Analyse
client
objectives,
financial
situation and
risk profile
FNSASICX503A.2.1
After the initial interview, you will conduct research to analyse the clients’
insurance needs.
Consideration needs to be given to seeking specialist advice and consulting
the client as required.
(a) To take into account Bill and Mary’s expectations and discuss their specific insurance
needs, how would you explain to Bill and Mary each of the following types of
insurances you could recommend?
FNSASICX503A.2.1 (b & c & d) and 1.5(i) (f)
No Insurance Types Insurance Definitions Mark
1. What is Term Life
Insurance?
This is a type of insurance policy which allows the clients with
insurance coverage for specified or limited term and if the client
dies or faces a terminal illness during the coverage period for which
he dies, there would be a payment of lumpsum amount to the
nominee of the insurer. The money could be used by the surviving
party to provide continuing income, payout debts or provide for
future education of the children. This money can be used by the
surviving parties in any way the clients seems fit. / 1
2. What is TPD Insurance? TDP insurance is quite similar to the Life insurance however, in this
insurance the insurer does not die but suffers from a total and
permanent disability for which the individual is not able to do any
kind of work. This money is received as a coverage insurance
against permanent and total disability of the client. This money
could be used to pay of mortgages or other outstanding debts or it
can provide you with an income and pay for ongoing costs like
medical bills. / 1
3. What is Crisis/Trauma
Insurance?
Trauma Insurance provides a one off lump sum payment in the
event of any one of 30 or more medical conditions. Trauma
insurance can be stated as a lumpsum payment which is provided
to the client when it is discovered that the client is facing from
serious illness. They range from cancer and heart attacks through
to organ transplants, This will help with the associated cost with
recovery from a major illness. It will help pay for any necessary
lifestyle changes and medical expenses such as nursing care or
wheelchair access or necessary changes to the home. There is a
waiting period of 90 days after first taking out the policy. (Some
insurers will cover children between the ages of 1 to 12) This policy
would then convert to death cover when the insured reached the
age of 16 up to the age of 64.There is a buy back option available
on this policy after 12 months. / 1
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Insurance 13 of 36
4. What is Income Protection
Insurance?
Income Protection will insure the person’s standard of living will
remain relatively unchanged if they are unable to work. This policy
will pay up to 75% of the client’s income. Depending on the
Company and the policy taken these payments can continue up to
the age of 70. There is generally a waiting period of 14 days. You
must be declared unfit for work by a doctor to be totally unfit or
unable to work. These benefits will continue to be paid even if the
insured becomes entitled to other benefits such as TPD during that
time.
Stepped and level premiums are available with this policy. You may
also have an agreed value specified in this policy so that even if
your income decreases over time your amount payable will still be
the same. There are exclusions that may apply like war, intentional
injury pregnancy and childbirth or miscarriage(unless disability
continues for more than 3 months after the end of the pregnancy) / 1
5. What is Business
Insurance? (Both capital and
revenue purpose)
Business insurance is for the protection of the owner or key person
in the business in the case of death or disablement. It is possible to
be covered for up to$50,000 per month for business expenses such
as Utility bills, accountant fees, rent, rates etc. . It also can give
income protection for the key person or business owner. The client
has to be working for over 25 hours per week and 48 weeks per
year. The benefit period is limited to a period of 12 months. This
would provide the self-employed person with the support that
employed people have with sick leave or long service leave. / 2
6. What is General Insurance? General insurance covers property and contents for home, vehicles
and public liability. / 1
Sub-total / 7
Continued
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Insurance 14 of 36
Assessment Task 2.1, continued Name: ____________________
(b) Bill asks you what the difference is between level and stepped premiums. How would
you respond?
FNSASICX503A.2.2
No Types of
Premiums
Definition
Mark
1. Stepped Stepped premiums are options which is provided to investors where they can
opt for insurance premiums which increase with the increase in age of the
insurer and the insurer can claim benefits at early ages as there is a cost
benefit. Stepped Insurance premium increases on a year to year basis.
/ 3
2. Level Level premiums cost the same amount throughout the life of the policy
(Indexed to CPI) This is usually available over a period of 5, 10 or 15 years or
till the age of 65. After the agreed period it can then be changed to a stepped
basis until the age of 65. / 4
(c) Which type of premium, stepped or level, do you think would be the most appropriate
for these clients? Why?
FNSASICX503A.2.1 (c)
No Recommended Method of Premium Mark
1. Bill should have stepped as he has a good income. This means his payout will be in line with his
premiums and be able to payout the debts. Mary should have level as she is not the high income
earner and her payout would be to help pay the debts not clear them. / 3
(d) Are Bill, Mary, their superannuation funds or Bill’s business able to claim any tax
deductions for any of the policies you have discussed above? If so, which one(s)?
(Answer either ‘Yes’ or ‘No’ in the spaces provided in the table below)
FNSASICX503A.2.1 (a)
No Insurance Types Tax Deductibility
MarkIndividual Owner Super Fund Owner Company Owner
1. Term Life No Yes No / 3
2. TPD No No No / 3
3. Crisis/Trauma No No No / 3
4. Income Protection No No Yes / 3
5. Business - Capital Yes No Yes / 3
6. Business – Revenue Yes No Yes / 3
7. General Insurance Yes No No / 3
Sub-total / 31
Continued
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Insurance 15 of 36
Assessment Task 2.1, continued Name: ____________________
(e) Please discuss any alternative strategies or recommendations that you considered
but rejected for these clients, explaining why they were not as appropriate as the ones
you recommended above.
FNSASICX503A.2.3
Alternative Strategies not Recommended and why Mark
To put Term Life in Superannuation; however this wasn’t an option as it is important to
build up their superfunds. I also considered telling the clients about bundling as an
option as the premiums are less. I would also explain why I don’t recommend this as
the sum insured is only paid once because any TDP or Trauma payment is simply an
advance of part or all of death cover. I believe that in the event of any one of these
things happening they would need the full amount’s to cover their debts, change their
house also to educate and provide for their children
/ 5
(f) What further documentation might be required from the client throughout the
analysis?
FNSASICX503A.2.2
No Further Documentation to be Requested Mark
1. Family Medical History Doctors Medical Examination Reports / 1
2. Key person evaluation, Tax Advise. / 1
3. Proof of income and hours worked / 1
4. Value of business / 1
5. Doctors Medical Examination Reports / 1
(g) What higher level or specialist advice might you seek by referring the client to the
following advisers?
FNSASICX503A.2.3
No Specialist Adviser Reason for referral Mark
1. Chartered Accountant (CA) All financial advice of the business would be provided
which can be related to valuation of the business,
investment decisions and also taxation related
expertise. / 2
2. Lawyer Bill and Mary do not currently have a will. They also
need to draw up a Power of Attorney. They may need
to draw up a buy /sell agreement The lawyer can
effectively perform legal services for the client / 2
(h) Referring to the client’s attitudes regarding insurance, what do you think their
combined product risk profile is, in relation to the insurance products being offered?
FNSASICX503A.2.4
No Client Risk Profile Mark
1.  Conservative  Moderate  Speculative / 1
Given this risk profile, how would it affect the strategies you may recommend? Mark
2. I will still recommend the full amount of cover even though Mary only wanted to have
Life Insurance cover due to the fact that her friend had recently lost her husband the
clients may choose to take only the Life policy. / 5
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Sub-total / 20
Continued
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Insurance 17 of 36
Assessment Task 2.2 Name: ____________________
2.2 Develop
appropriate
strategies and
solutions
FNSASICX503A.2.5
FNSASICX503A.2.6
The next stage in the financial advice process is to develop appropriate
strategies and solutions. This Assessment Task ask you to:
 Determine an appropriate strategy to provide for identified needs and
outcomes from analysis of products, client risk profile and assessment of
their needs
 Conduct relevant research, analysis and product modeling and an
appropriate solution, plan, policy or transaction drafted for presentation
to the client.
(a) Explain to Bill and Mary why each of the following potential insurance strategies are
suitable and appropriate to meet their identified needs and risk profile. (An additional
reason is required for each strategy)
FNSASICX503A.2.5
No Potential Strategies Suitable Strategy Analysis/Reason for Recommendation Mark
1. Term Life Yes/No  Bill is the major bread winner and cover in the event of his
death, or, terminal illness is critical to maintain the family
home, funeral expenses and future goals.
 Money can be used to pay for his children’s education as
Mary’s income will have to allocated to other expenses / 1
2. TPD Yes/No  Bill is the major bread winner and cover in the event of his
Total and Permanent Disablement is critical to maintain the
family home, living expenses and future goals.
 The payment can be used to make altercations to the family
home if necessary to accommodate for the new disability / 1
3. Crisis/Trauma Yes/No  Provide for medical costs in the event of a Trauma event
 Covers over 30 common medical conditions, available to
occupations excluded from TPD Cover. / 1
4. Income Protection Yes/No  Provide Bill or Mary with monthly or fortnightly income to
replace income lost as a result of an injury or illness
 Client can choose their waiting period, payment are paid in
addition to other benefits. Mary does not qualify as she does
not currently work more than 20 hours per week. / 1
5. Business - Capital Yes/No  It provides for a lump sum to be paid if the Bill’s interest in
the business needs to be purchased from Mary.
 Bill will not have to worry about his partner selling his own
assets to come up with the money / 1
6. Business – Revenue Yes/No  Covers the on-going costs of running the business in the
event that Bill or his partner is absent due to sickness or
injury
 Cover will be provided for up to a full year. / 1
7. General Insurance Yes/No  Take out additional cover for new lap top and grand piano to
ensure adequate cover.
 Also consider cover for any jewelry – General insurance will
need to be provided by general insurance agent. / 1
Sub-total / 7
Continued
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Insurance 18 of 36
Assessment Task 2.2, continued Name: ____________________
(b) Draft the insurance recommendations for the six types of policies listed below.
Detail your analysis and financial calculations to determine potential benefits of each.
FNSASICX503A.2.6
No Insurance Types Amount of cover Required (including calculations) Mark
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Insurance 19 of 36
1. What level of Term Life
Insurance do you
recommend?
Bearing in mind that this is a lump sum payment on death but also
in some cases earlier if there is a Terminal illness clause.
Bill I would recommend for you $1,200,000
As discussed you would like to ensure all your bills were going to be
paid so Mary and the children would not need to struggle.
You have Liabilities of $150,000
Once you debt is paid out there will be a balance of $1,050,000
over 20 years this would be $52,500 per year although your
expenses are $70,000 you would have no mortgage payment and
with Mary returning to fulltime work next year you have agreed this
be a comfortable amount of cover for you.
Mary $600,000 would be enough as there is no need to over insure
as Bill earns $100,000per year, Bill would be able to pay out the
remaining debt of $150,000 leaving $450,000 to invest and put
aside for the Private Secondary Education that you are planning for
the children, Bill you could also pay for a Nanny and or house
keeper with these funds.
Bill $1,200,000. As this amount would pay out their mortgage and
provide for the education of the children through to the end of
University approximately 20 years. It would also provide a
continuing level of the current lifestyle if invested. They could then
continue to live in their home without any real financial hardships.
Mary $600,000 as she is not the main provider. Bill could pay of the
mortgage and continue living in the house. As Mary is the main
homemaker the remaining sum could be invested and Bill could use
the interest to provide a Nanny or housekeeping services if needed.
Characteristics: -
Pays benefits in the event of death only
Stepped or level premiums
Guaranteed renewable to the age of 99
Entry age between 16 to 65
Advantages:
Premiums are Tax deductible if paid through Superfund
Guaranteed renewable to 99
Level or stepped premiums
Disadvantages:
Do not cover for war, Suicide if within the first 13 months,
Intentional self- inflicted injury
Not tax deductible except through superfund.
AIDS unless it is a special extension
Alternatives Considered:
To put Term Life into Superannuation however this was not
advisable as it is important to build up their superfunds.
Stepped are best as they are cheaper and the extra money will be
needed in the next 20 years due to the added expenses of
educating the children.
/ 5
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Insurance 20 of 36
2. What level of TPD Insurance
do you recommend? Bill and Mary as we discussed TPD insurance is a lump sum
payment to assist in the event of a permanent disability this can
take up to 6mths to pay out unless one of the following occurs, loss
of sight/limb enablement, A cognitive element loss or a loss of
independent existence. The funds could be used for home
renovations such as railings and or ramps. This is the amount
discussed and approved by you both as you are also both adding
this to your Term life insurance
Bill with $1,000,000.00 of own occupation cover this will ensure that
your Liability of $150,000 is paid out and money is left over for
medical bills etc.
Mary as you are not the main wage earner, under any occupation
cover $5000.000.00 would be a sufficient amount to take the
pressure of by paying out the $150,000 and paying for medical
expenses renovations etc.
Bill
I would advise his own occupation and that he should have
$1,000,000.00 With this amount Bill would be able to afford to
reeducate himself after he has paid out the mortgage and any
debts.
Mary
She doesn’t qualify for own occupation so would have to go under
any occupation. I would consider the sum of $5000, 000.00 as she
is not the main breadwinner. In both cases these sums could also
be used for any medical care that may be needed.
Characteristics:
TDP is like Term Insurance in that it pays a lump sum payment.
This money can be used to renovate the home Ramps Etc. In the
event of life changing injury or illness.
Waiting period is generally 6 months
Can also be used for paying debts, mortgage or supplement
income.
Advantages:
Can be used for long term Medical expenses
Debts can be paid
Disadvantages:
Waiting period is 6 months or more
Cover is limited to 65
Exclusions on some occupations.
Alternative:
If I placed Bill under any occupation it may make it harder for him to
claim when it is needed the most.
Lower premium for Mary however I felt extra pay may help when
needed in the home as a result of disability or severe illness.
/ 5
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Insurance 21 of 36
3. What level of Crisis/Trauma
Insurance do you
recommend?
Bill and Mary We have chatted about Trauma insurance and you
have both agreed that it is important to you, you are happy with
$250,000 for Bill and $125,000 for you Wendy because of the high
premiums you believe this will assist with any renovations or extra
nursing care that may be needed in the event of a Trauma cover
being executed for example heart attack stroke or cancer.
Bill $250,000.00 and Mary $125,000.00 At present they are both in
excellent health. This can be reviewed and changed at a later date
Characteristics
Available for occupations excluded from TPD
Covers over 30 illness Cancer , stroke, multiple sclerosis , heart
and artery disease
One of lump sum payment
Advantages:
Compliments TDP
Covers many common illnesses
Cover up to $2,000,000.00
Disadvantages:
Premiums are more expensive
Alternative:
Increasing levels however increased costs were not justifiable at
this time. Can be reviewed at a later date after overseas holiday
and as the client’s age.
I have also mentioned Trauma cover for the children and this also
will be considered at a later time. / 5
4. What level of Income
Protection Insurance do you
recommend?
Bill $7,500.00 per month.
This is the maximum benefits he can have as it is 75% of his
current wage. This amount will cover all monthly expenses and
allow a little for extras.
Mary does not qualify as she only works 20 hours per week.
Characteristics:
Pays monthly to replace income losses due to inability to work.
Client can choose their waiting period.
Advantages:
Benefits are paid in addition to TPD and other covers few
Exclusions.
Disadvantages:
Business expenses are not covered.
Pregnancy is not covered.
Alternatives:
I considered a lower level however felt the higher level was justified
as Mary is only working 20 hours per week and if for some reason
Bill had to claim they’d need the extra income.
Stepped premiums were once again cheaper.
Agreed value was considered but as Bill’s wage will increase not
decrease. He can prove his income at any time so indemnity was
considered the cheaper option. / 5
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Insurance 22 of 36
5. What level of Business
Insurance do you
recommend, considering
both Capital and Revenue
purposes?
Key Person Cover of $ 500,000.00 would enable Bill’s partner to
pay out Mary in the event of Bill’s death or severe disablement or
critical illness. The clients currently do not have a Buy/Sell
Agreement so I strongly advise them to do so
Characteristics:
It is for the protection of owners or key persons in case of the death
or disablement of one or other of the partners of a business.
Advantages :
Provides the Funds for the purchase of the Key person’s ownership
in the business.
Allows for smooth transfer of ownership
(Decision is taken out of Mary’s hands as agreement is binding.)
Disadvantages:
Additional cost.
Alternatives: We considered whether the partners would be able to
finance the purchase of the others half interest in the business and
agreed that it would put them under considerable financial stress if
this were to happen.
/ 10
6. What level of General
Insurance do you
recommend?
I am not authorized to advise on General Insurance however I have
mentioned to Bill and Mary that although they already have General
Insurance in place for their house, cars etc. they might wish to add
the jewellery, Piano, and computer. / 5
Sub-total / 35
Total / 100
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Insurance 23 of 36
Assessment Task 3 Name: ____________________
3.0 Present
appropriate
strategies
and solutions
to client and
negotiate a
financial plan,
policy or
transaction
FNSASICX503A.3
The next step in the financial services advice process is to arrange a time to
meet with the client to present appropriate strategies and solutions to client and
negotiate a financial plan, policy or transaction.
This will require that:
1. Product knowledge appropriate for the service or product offered is
demonstrated when presenting the product
2. The proposed transaction is explained and discussed with the client in a
clear and unambiguous way
3. Relevant details, terms and conditions of product/service are reinforced to
client
4. Impacts and possible risks of the solution are disclosed in a clear and
concise manner to the client
5. Client is provided with written supporting documentation (disclaimers;
disclosures; product application forms; written advice) and guided through
the key aspects of the documentation
6. Concerns or issues the client has regarding the proposed plan, policy or
transaction are discussed and clarified
7. Confirmation is sought from client that they understand the proposed plan,
policy or transaction.
You should consider the level of Life Insurance knowledge and sophistication of
the client when contemplating how to present and negotiate strategies and
solutions.
(58 Marks)
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Assessment Task 3.1 Name: ____________________
3.1 Present
appropriate
strategies and
solutions to
client
FNSASICX503A.3.1,
3.2,.3.3,.3.4 and 3.5
After you have developed appropriate strategies and solutions, you will
arrange a time to meet with the client to:
 Present appropriate service or product,
 Explain the proposed transaction,
 Reinforce relevant details, terms and conditions,
 Disclose impacts and possible risks of the solutions, and
 Provide written supporting documentation.
Consider the level of Life Insurance knowledge and sophistication of the client
when contemplating how to present strategies and solutions.
(a) Prior to presenting the strategies and solutions to the client, describe what
preparation you might do and what documentation you might need.
FNSASICX503A.3.1
No Questions Answers Mark
1. Describe what
preparations you
would undertake
After analysis of the case of the client, relevant SOA would be
prepared by me judging from all the different products which are
available in the market. The SOA should have the client’s correct
current situation, present the recommendations in a clear and
concise manner, have information about all fees, it should explain
the relationships I may have to relevant companies to the client,
plus explain any disclaimers to the client. I would then phone to
make appointment with the clients to present and discuss the
SOA. / 2
2. Describe what
documentation you
will need for this
meeting
Statement of Advice Form, Authority to Proceed. Insurance Plan
Forms, Record of Advice, Product Disclosure Form.
/ 2
Sub-total / 4
Continued
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Insurance 25 of 36
Assessment Task 3.1, continued Name: ____________________
(b) Explain how you would present your insurance strategies to the client.
In 300-500 words and using the headings below, write a script that you might follow to
present your strategies in a clear and unambiguous way
FNSASICX503A.3.1 and 3.2
No Executive Summary Mark
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Insurance 26 of 36
Introduction
It’s nice to see you again Mary And Bill. Thank you for making this time to get together
so we can go through the Statement of Advice I have prepared since we last meet
Scope of advice
To compile this advice I took into account that you both currently:
a) Have no insurances in place, not even within your Superannuation Plan
B) Bill you are a joint partner in heavy engineering business
c) Mary you are currently working 20 hours per week as a Fitness Instructor
d) You have 2 young children who will need education for the following 20 years app.
e) Your home is valued at $600,000.00 and you have a mortgage of $150,000
f) Bill currently you have $120,000 and Mary $27,000.00 in your Superfunds
Objective
The objective was to provide you with insurance and assure your financial security and
give you peace of mind that you could provide for your children’s future education in
the event of that either one of you were unable to work in the event of accident,
sickness, total disablement, or Death.
Recommendations
I have looked to cover you both for Life, Total Permanent Disability and Trauma, plus
Loss of Income for Bill as only he qualifies. I also thought to cover your business by
including some Key Person Cover. After viewing all the insurance options available
through our company I have chosen the following advice which I believe will meet your
needs:
Bill:
Life Insurance of $1,000,000
Total Permanent Disability of $ 850,000
Crisis/Trauma $ 300,000
Income Protection of $ 7,250.00 per month
Mary:
Life Insurance of $ 600,000
Total Permanent Disability $ 500,000
Crisis/ Trauma $ 150,000
Business : Key Person Cover $ 500,000
Conclusion
I am confident that if you choose to follow the recommendations I have made in this
Statement of Advice you will be adequately covered for personal risk to insure that your
income and future goals for both yourselves and your children will be meet. Your
assets will also be protected insuring you would be able to continue living in your home
with no loss in your standard of living should an insured event occur.
/ 20
Sub-total / 20
Continued
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Insurance 27 of 36
Assessment Task 3.1, continued Name: ____________________
(c) During the presentation of your recommendations to the client, how would you
describe the proposed Life Insurance products?
FNSASICX503A.3.3 and 3.4
No Advice Characteristics
(lump sum/periodic payments
and condition or event of
payment)
Advantages
(amount of cover, likely impact)
Disadvantages
(possible risks/exclusions)
Mark
1. Term Life Characteristics: -
Pays benefits in the event
of death only
Stepped or level
premiums
Guaranteed renewable to
the age of 99
Entry age between 16 to
65
Advantages:
Premiums are Tax
deductible if paid through
Superfund
Guaranteed renewable to
99
Level or stepped
premiums
Disadvantages:
Do not cover for war,
Suicide if within the first
13 months, Intentional
self- inflicted injury
Not tax deductible except
through superfund.
AIDS unless it is a special
extension / 3
2. TPD Characteristics:
TDP is like Term
Insurance in that if pays a
lump sum payment. This
money can be used to
renovate the home,
Ramps Etc. In the event
of life changing injury or
illness.
Waiting period is
generally 6 months
Can also be used for
paying debts, mortgage
or supplement income.
Advantages:
Can be used for long
term Medical expenses
Debts can be paid and
client can re educate
Disadvantages:
Waiting period is 6
months or more
Cover is limited to 65
Exclusions on some
occupations. Pilots, police
/ 3
3. Crisis/
Trauma
Characteristics
Available for occupations
excluded from TPD
Covers over 30 illness
Cancer , stroke, multiple
sclerosis , heart and
artery disease
One of lump sum payment
Advantages:
Compliments TDP
Covers many common
illnesses
Cover up to
$2,000,000.00
Disadvantages:
Premiums are more
expensive
/ 3
4. Income
Protection
Characteristics:
Pays monthly payment to
replace income losses
due to inability to work.
Client can choose their
waiting period.
Advantages:
Benefits are paid in
addition to TPD and other
covers.
Very little exclusion.
Disadvantages:
Pregnancy is not
covered.
Business expenses are
not covered.
/3
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Insurance 28 of 36
5. Business -
Capital
Characteristics:
It is for the protection of
owners or key persons in
case of the death or
disablement of one or
other of the partners of a
business.
Advantages :
Provides the Funds for
the purchase of the Key
person’s ownership in the
business.
Allows for smooth (and
obligatory) transfer of
ownership
Decision is taken out of
Mary’s hands as
agreement is binding
Disadvantages:
Additional cost.
/ 3
6. Business –
Revenue
Characteristics:
Protection for owners or
key persons in case of
death or disablement
Advantages.
Cover of up to $60,000
per month for business
expenses.
Disadvantages:
Client must be working at
least 25 Hours weekly for
up to 48 weeks per year.
Benefit is limited to 12
months. / 3
7. General
Insurance
Characteristics:
Covers property such as
house and contents, cars,
business building and also
public liability.
Advantages:
Tax Deductible
Day one coverage
Disadvantages:
Not guaranteed
renewable
Benefit periods from 52
weeks to 260 weeks.
( I am not authorized to
advise on General
Insurance however I have
mentioned to Bill and
Mary that although they
already have General
Insurance in place for
their house, cars etc. they
might wish to add onto the
cover the Piano, computer
and jewelry) / 3
(d) When you provide the client with supporting documentation, what are the key points
you will highlight as you guide the client through key aspects of the documentation?
FNSASICX503A.3.5
Supporting
Documentation
Key aspects
(that you will highlight to the client) Mark
1. Disclaimers Certain key aspects which are covered in the SOA which is
prepared.
/ 1
2. Disclosures The disclosures of the SOA which shows the fess and commission
aspect would be highlighted to the client. / 1
3. Product Application
Form
All information on this form must be true.
/ 1
4. Written Advice Notify the client of the date the advice was taken and will need to
be updated is there are any changes / 1
Sub-total / 25
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Continued
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Insurance 30 of 36
Assessment Task 3.2 Name: ____________________
3.2 Negotiate a
financial plan,
policy or
transaction
FNSASICX503A.3.6,
and.3.7
After you have presented the appropriate strategies and solutions, you will
most likely need to:
 Discuss and clarify any concerns or issues, and
 Seek confirmation from the client that they understand.
Consideration the level of Life Insurance knowledge and sophistication of the
client when contemplating how to negotiate a plan policy or transaction.
(a) Explain how would you discuss and clarify the concerns listed below in order to gain
agreement.
FNSASICX503A.3.6
No Concerns Explanation Mark
1. This is too
expensive!
I would point out the alternatives of not having cover and the
losses that could occur both financial and personal. If they were
really insistent we could review and remove , or lower benefits to
keep the cost down and review increases at a further date.(Some
cover is better than none) / 2
2. Your commission is
too high!
I would point out that my commissions are paid by the companies
I am dealing with on their behalf, not by the clients. In addition to
this I would assure the client that I would provide the best services
and the clients would be satisfied 100%. / 2
3. I don’t need all these
insurances!
I would go back to the SoA and point out my recommendations
and explain the benefits to the client and that it will give them
financial protection and peace of mind. I would explain the
benefits and need of insurance policies in today’s world. / 2
(b) How would you seek confirmation from the client that they understand the proposed
plan, policy or transaction?
FNSASICX503A.3.7
Type your answer below Mark
Have them read and sign the SoA. / 3
Sub-total / 9
Total / 58
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Assessment Task 4 Name: ____________________
4.0 Agree the
plan, policy
or transaction
and complete
documentation
FNSASICX503A.4
The next step in the financial services advice process is to agree the plan,
policy or transaction and complete documentation.
This will require that:
1. The clients' formal agreement to the proposed plan is gained
2. Associated fee and cost structures are clearly explained and confirmation
of understanding gained from the client
3. Proposal and all other statutory and transactional documents are
completed and signed off by the client
4. Copies of appropriate documentation and the signed agreement are
exchanged.
(32 Marks)
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Insurance 32 of 36
Assessment Task 4.1 Name: ____________________
(a) The clients have agreed to your recommendations. Provide responses to the following
questions and list the statutory and transactional documents that need to be signed by
the client (where required).
FNSASICX503A.4
No Questions/Explanations/Documentation Mark
1. What would you ask
Bill and Mary to gain
their formal
agreement to the
proposed plan?
FNSASICX503A.4.1
I would ask them whether they are satisfied with the terms and
speculations which are included in the SOA and whether all
requirements of the clients are included in the SOA. I would also
advise the client that in case of any amendments regarding
products, now would be the time to suggest.
/ 3
2. What document is
signed to confirm
that the associated
fees and cost
structures are clearly
explained and
confirmation of
understanding
gained from the
client?
FNSASICX503A.4.2
The Statement of Advice is needed to be signed by the clients in
order to suggest that the confirmation and understanding is
gained regarding the fees and costs structure of a product.
/ 3
3. What statutory and
transactional
documents are
completed and
signed off by the
client?
FNSASICX503A.4.3
The FSG, Fact Find, SoA, Authority to Proceed and Application
Form
/ 3
4. Which documents
are exchanged with
clients after
implementation has
been agreed upon?
FNSASICX503A.4.4
The SoA, Authority to Proceed, PDS, Application with declarations.
/ 3
Sub-total /12
Continued
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Insurance 33 of 36
Assessment Task 4.1 Name: ____________________
(b)Complete an Implementation Plan that details your planned actions once Bill and Mary
have decided to proceed, providing an indication of when they must be completed by.
FNSASICX503A.4.4 A Adviser C Client
No. Implementation Plan Who When Mark
1 Fill in application form A & C ASAP / 1
2 Sign declarations C ASAP / 1
3 Complete medical authority A & C ASAP / 1
4 Complete DD form if necessary A & C ASAP / 1
5 Submit application with all necessary forms A After
meeting / 1
6 Follow up any outstanding requirements A When
required / 1
7 / 1
8 / 1
9 / 1
10 / 1
(c) Save the life insurance brochure and application from and complete it for Bill and Mary
for life cover only. You may make assumptions as required in order to complete all fields
on the application form. If your recommended amount of life cover for Bill and Mary
does not align with the amounts given on the form, insert under “Other Amount”.
Disregard the “(up to $1 million)” statement.
Scan and upload (or email) your completed form with your Assessment Task. /10
Sub-total / 20
Total /32
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Assessment Task 5 Name: ____________________
5.0 Provide
ongoing
service
where
requested by
client
transaction
FNSASICX503A.5
The final step in the financial services advice process is to provide ongoing
service where requested by client transaction.
This will require that:
1. Type and form of ongoing service including reporting on performance and
review of plan, policy or transaction is agreed with the client.
2. Fees and costs for ongoing and specifically defined service are clearly
explained and confirmation of understanding gained from the client, and
3. Ongoing service is provided as required.
(24 Marks)
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Insurance 35 of 36
Assessment Task 5.1 Name: ____________________
(a) Please describe the ongoing service options available to Bill and Mary and the
associated fees.
FNSASICX503A.5.1 and 5.2 (a)
No Options Description/Fees Fees
Mark
1. The “No service”
option
This generally is a one off investment. In choosing this option
no ongoing service or review is provided to the client unless
requested by the client at a future date.
No Fee
/ 2
2. The “Insurance
Review” option
The fee to be charged will depend on the reviews (6-12
monthly) The client must request a review to look at further
insurance/ financial investment opportunities.
Advisors
choice
/ 2
3. The “Financial
Plan Review”
option
This service provides a quarterly/half yearly or annual review
of the overall financial plan and the investment portfolio
recommended. Depending on the complexity of the review the
fee may be higher however the minimum fee is generally
$350.00. / 2
FNSASICX503A.5.3
(b) Which option you would recommend and why? /3
Yearly review one month before policy renewal date to ensure their policy meets their
circumstances.
Sub-total / 9
Continued
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Insurance 36 of 36
Assessment Task 5.1 Name: ____________________
(c) (i) Of the on-going service you have nominated, explain the value to the client of these
Serv ices.
/5
The services which is offered to the client is to best value as the same insures the client life and several
other insurance policies is also suggested. I would also explain to the clients that all theirs needs and
requirements are taken care of and the insurance is suggested on the basis of the requirements of the
client for present as well as for future.
FNSASICX503A.5.2(b)
(ii) How would you confirm Bill and Mary’s understanding of the fees and costs associated with
the on-going service you have recommended? /5
The fees and costs which the clients have to incur are pointed out in the SOA in details and the same can
be highlighted to the client with further explanation regarding the breakup of the expenses.
FNSASICX503A.5.3
(iii) How do you ensure the proposed ongoing service is provided as requested? /5
In order to ensure that the proposed ongoing services is provided to the client a separate database can be
created which would provide a reminder and ensure that the work of the client is done.
Sub-total / 15
Total / 24
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