Goals & Objectives: ACFIN202A Insurance Planning

Following discussions with Tim and Kate, their goals and objectives agreed to be addressed are as follows:

1. Ensure a net income of $70,000 per annum is available to maintain living expenses. This includes $14,000 in school expenses (combined) to last until the children are age 21.
2. Maintain a cash reserve of $20,000.
3. They would like to know if investing somewhere else would be better than paying off the mortgage first.
4. Review current superannuation salary sacrifice contributions of $25,000 per annum each into their respective superannuation funds. They are interested to know benefits of inside/outside super and appreciate any advice applicable for them.
5. Ensure their income is replaced in the event of an accident or illness while employed, and both Tim and Kate intend to retire at age 65. 6. Ensure they have adequate Life and Total Permanent Disability insurance. 7. Explore any other personal insurance covers that they may require. 8. Planning for a third baby in 2020 though Kate has pregnancy complications.
   Assumptions:
   • Inflation 2.5%
   • AWOTE 3% (use for wages inflation) • Use 2019-20 tax rates where applicable • Expenses are non-deductible and they are exempt from the Medicare levy surcharge. All expenses to be adjusted to inflation of 2.5%. • Use FBT rates effective 1 April 2019 where applicable • The investment growth rate is to be provided by you, however, you must apply due diligence on the rate provided and provide your source or research reference/s. This would be based largely off the investment and the asset allocation of your investment portfolio

1. Conduct a ‘SWOT ANALYSIS’ of your clients’ situation and identify your clients’ goals and objectives (SMART goals). Set and prioritise into short, medium and long term goals.
2. Construct an ‘INSURANCE NEEDS ANALYSIS’ by using the prescribed software or your own calculator to calculate how much personal insurance your clients require, according to their goals and objectives. Please show your workings in the Appendix only.
3. In preparing Statement of Advice (SOA), make sure that you have incorporated the followings:
   a. What if Tim and Kate don’t have insurance? b. What insurances could Tim and Kate have taken out? c. What if Tim and Kate had these insurances?
4. List what strategies you would advise your clients write these in your Strategy Paper. Include your recommendations on all the available life insurance types.
   As a guide, you should include the following in your answer when comparing and recommending personal insurance:
   a. Type and amount of cover/s b. Name of the product/s c. Features, advantages and drawbacks of the product/s d. Full disclosure of remuneration and fees e. Clauses of the product f. Exclusions of the product g. Explain how your recommendations meet your client’s goals and objectives and justify the appropriateness of each piece of advice.
5. Describe the purpose of the insurances selected, highlighting the circumstances where the benefit may be paid, and the risk of not holding this insurance.

6. In your analysis, choose appropriate policy structures for each cover in your analysis. In your answer, include the policy features that you would recommend for each type of cover and the basis for your recommendation, including (but not limited to):
   a. Sum insured b. Stand alone or bundled (multiple policies or linked) c. Level/stepped/hybrid d. Guaranteed renewable, interim cover, cooling off period e. Waiting Period f. Benefit Period g. Superannuation coverage h. Insurance inside/outsidesuperannuation i. Replacement of product j. Basic or comprehensive cover k. Definitions I. Clauses m. Exclusions n. Optional Extras
7. Following completion of the above, write your answer in a report form (i.e. Scaled SOA template), as per Regulatory and Higher Education guidelines.
   Part B: Add to appendix within report
8. Insurance needs analysis 2. Insurance products research and features 3. Cash flow analysis/projections for next 5 years 4. Any other important information that you think would be relevant or valid

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