Important note: You need to answer the question in a Statement of Advice (SOA) format in accordance with ASIC guidelines (refer to RG 90 for examples only). The SOA must have a 2 page ‘Executive Summary’ section where you summarise the client’s current situation, needs, concerns, goals, objectives and your recommended strategy.
Your SOA should clearly show the structure you recommend for their portfolio, how they can achieve their goals and where the capital and income will be sourced. Your SOA should address a long-term plan to provide income and should include projections.
Case Study: The Jones Family Insurance Portfolio AND Claim Process
Introduction
You are a financial adviser for “St George Financial Planning Services Pty Ltd” and the following information is an extract of data you gathered as part of the Financial Needs Analysis during the initial client meeting with Tim and Kate Jones in June 2019. The information below is used to formulate an appropriate analysis of Tim and Kate’s personal insurance needs. The purpose of undertaking this analysis is to gain an understanding of the Jones family, and to recommend appropriate strategies and risk management advice and insurance coverages including any potential claims.
Students are expected to undertake an insurance needs analysis, research appropriate products (including costs, features and claim processes) for the family. As part of the analysis, consider Life, TPD, Trauma and Income Protection insurances including any general insurance products as relevant to their situation for this project.
There are two phases in this project. One is at June 2019, you have collected data, analysed and recommended appropriate insurance covers for the family. In the second phase (December 2019), one of the family members has been diagnosed with a medical condition and the family plans to lodge a claim to their insurance provider. The Claim process MUST NOT be included in the Statement of Advice (SOA) rather in WEEK 11 at the presentation assessment only.
The Clients
Tim is a forty-five-year-old electrical engineer who has been working for Telstra since 2000. His wife, Kate, is a forty-two-year-old homemaker, formerly a school teacher. She is not working currently due to her care for their children (aged 9 and 7 Kristy and Bob), and have been married for twelve years. Both Tim and Kate are in good health, don’t smoke, however Tim likes a drink and its now a daily habit. They would like another child, but Kate previously had serious complications and is now considered a high pregnancy risk (which needs to be taken into consideration when selecting health insurance coverage for the family). Their annual net income is $75,000 excluding 12.5% superannuation (Tim’s salary of $110,000, less taxes and other deductions). They can hardly save anything after yearly combined expenses of around $75,000.
They own two cars. John drives a 2016’s Mazda 3 (still $12,000 loan to pay) and Kate drives a 2012 Subaru Tribeca (paid up in full).
They live close to the city in a house valued at $1.5M with a mortgage of $600,000 (they pay a variable 4.5% interest rate). Both children attend public schools. On Tim’s income they are able to comfortably afford living expenses, school fees and the mortgage and have accumulated $20,000 in savings.
Tim has superannuation balance of $200,000 with Cbus (Life & TPD cover of $150,000 with income protection) and Kate has $50,000 in her NGS super fund (Life & TPD cover of $100,000 with no income protection). Both are in the balanced portfolio option. They have no other debts such as credit card, and have no private health insurance. They go on holidays almost every after two years and spend around $15,000 each year.
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