Important warning and instructions
Dear Adviser,
Warning
The product description and template wording below have been prepared by Macquarie Life Limited as a guide only to assist you in developing your own Statement of Advice (SOA)when offering Macquarie Life Active to your client’s.
This information may not be complete and does not consider your clients’ personal situation, needs or objectives – it is your responsibility to consider these aspects when formulating theSOA for your clients.
Should you choose to use all or part of this template to fit with your particular SOA, this is at your discretion. The law applying toSOAs is subject to amendment and reinterpretation at any time. This document is based on information from the Product Disclosure Statement dated 14 June 2010.
Instructions
The following section provides suggested wording that can be inserted into an SOA to explain why the cover has been recommended and the reason for the recommended ownership option. Fees are not included in this template and should be included in the Fee Disclosure section of the SOA.
The wording is provided as a guideline and advisers should seek guidance from their own compliance area to ensure all licensee and ASIC requirements have been met.
In some sections, the wording includes several options to allow advisers to tailor the advice to the client’s circumstances. Instructions for tailoring are shown in blue text and in brackets. Advisers should insert their own details or delete any sections that do not apply to the advice given, as well as delete the instructions. In some cases advisers may need to modify or provide additional wording to suit the client’s unique circumstances.
1.1 General Benefits of Macquarie Life Active
· Macquarie Life Active provides you with an alternative solution to the traditional death, trauma and disability benefits, including those traditionally classified as TPD benefits, within a package that enables multiple claims to be paid from the policy.
· Macquarie Life Active may continue to pay benefits for health events even after the initial cover amount has been exhausted.
· The benefits of Macquarie Life Active is to provide more comprehensive cover at a lower cost to the insured by paying benefits progressively as and when the medical condition becomes more severe.
· Macquarie Life Active provides you access to benefits which were not available due to your occupation previously
· Macquarie Life Active provides an insurance solution to help you to:
o Seek out the best possible medical care
o Access sometimes costly rehabilitation services; and
o Enable you to make certain lifestyle changes in the event of a serious illness or disability
We consider that the value of an insurance product should be assessed in terms of the overall package offered, including:
· The protection and benefits provided and their cost;
· The financial strength of the insurer, to give confidence that they will pay claims; and
· The level of service provided by the insurer, for example at the time of application and in the event of a claim, ongoing assistance and the timeliness with which services are provided.
Macquarie Life Active scores favourably in any product comparison when assessed under these criteria.
Under Macquarie Life Active, the lump sum benefits are integrated so that you choose an overall sum insured and this may be paid in full or in part on death or on the occurrence of one or more Health Events. As each benefit is paid, this reduces the amount remaining to be paid upon the occurrence of subsequent events. However, up to age 65 there is an underpin amount of 25% of the original sum insured below which the Health Events sum insured will never fall (subject to an aggregate claim limit of $5million).
1.2 Goals & Related Replacement Benefits of Macquarie Life Active
Goal : You have stated that you wish to obtain cover for death and a comprehensive range of medical conditions at an economic price.
Benefit : Unlike your existing traditional policies, Macquarie Life Active provides access to smaller targeted benefit payments for a wider range of medical conditions while still in their early stages of development. If the severity of the condition increases an additional benefit may be paid. By structuring the Active policy to pay a benefit that is matched to the severity of the health event it is possible to obtain coverage at more economical price.
The costs associated with Macquarie Life Active can be between 10% and 25% less expensive than traditional insurance products combining death, TPD and trauma benefits. The cost of comparable cover levels through your current policies would be $X, which is more than the premium quoted by Macquarie Life Active.
It is important to understand that for some benefits the severity payments under Macquarie Life Active will pay less than some traditional products.
Goal : We have discussed the types of personal insurance cover that are available and you have indicated a preference for a policy that provides an appropriate benefit payment that is based on the severity of a health event and the expected consequential financial costs.
Benefit : Unlike traditional policies, Macquarie Life Active provides partial benefits for a wider range of medical conditions while still in their early stages of development. The benefit paid under Macquarie Life Active is linked to the severity of the medical condition and the expected consequential financial costs. This enhanced matching of benefits paid to event severity is influential in our decision to recommend the replacement of your existing insurance policy with a Macquarie Life Active policy.
Goal : It is important to you that any insurance policy you hold applies objective criteria for approving a claim.
Benefit : Macquarie Life Active cover assesses claim events on the basis of medical outcomes. This compares to your current policy, which assesses events leading to total and permanent disability based on your ability to continue in an occupation. The high level of objectivity in the Active claims assessment and payment has influenced our decision to recommend the replacement of your current cover with a Macquarie Life Active policy.
Goal : You wish to simplify your insurance arrangements by consolidating all of your personal insurance cover into a single, cost effective product that meets your needs.
Benefit : Health events that lead to total and permanent disability are assessed by Macquarie Life Active on the basis of medical outcomes, rather than your ability to return to work. As a result of this unique structure Macquarie Life Active blends the attributes present in your existing traditional TPD policy/ies and your existing traditional trauma policy/ies into one comprehensive health events cover. This consolidated structure allows for cost effective replacement cover to be implemented through Macquarie Life Active that meets your risk management needs. This is in line with your goals and objectives.
It is important to understand that for some benefits the severity payments under Macquarie Life Active will pay less than some traditional products.
Goal : You have stated that you do not require an amount that would allow you to have the opportunity to change your lifestyle after suffering a relatively minor medical condition. You wish to implement adequate cover to protect your current lifestyle only and support your costs of care, so that the impact of the premiums on your cash flow is minimised.
Benefit : Because of the way that Macquarie Life Active structures health events cover, you are able to implement effective cover to help meet costs of care and help protect your current lifestyle in an efficient package. By replacing your existing traditional insurance policies with the recommended Macquarie Life Active policy you will reduce the premium cost by reducing expected benefit payments for minor events but also obtain cover for a much broader range of health event conditions. This outcome is in line with your goals and objectives.
It is important to understand that for some benefits the severity payments under Macquarie Life Active will pay less than some traditional products.
Goal : You have stated a personal insurance preference for a living benefit that supports you and your health throughout the course of your life. It is important to you that you are able to receive treatment for health events as soon as possible after diagnosis. You wish for us to review your existing policies with this in mind and advise on their appropriateness.
Benefit : Your existing traditional products pay benefits on an all-or-nothing basis depending on whether you meet a specific medical classifications. They also generally only pay a benefit once a condition has reached a high level of severity, often gauged by your ability to work rather than upon the medical classification of a condition.
In contrast, Macquarie Life Active pay benefits rated against a range of severity criteria for a medical condition. Macquarie Life Active provides progressive payments as the severity of the condition increases based on objective medical measures.
To illustrate the impact of these design differences consider what happens in the event of cancer diagnosis:
Under your existing traditional product the full sum insured would be payable if the malignant tumour is characterised by:
· Uncontrolled growth and spread of malignant cells; and
· Invasion and destruction of normal tissue.
The tumor must also:
· Require treatment by surgery, radiotherapy, chemotherapy, biological respnse modifiers, or any other major treatment; or
· Be totally incurable.
In these circumstances, Macquarie Life Active may pay a benefit of only 65% of the initial cover amount, however:
· Part of the 65% benefit may be paid earlier under benefit categories E (5%), D (20%) and C (40%) if the disease was identified earlier; and
· The benefit would be topped up to 100% of the initial cover amount if all treatment options were to fail and progression of the cancer could still be identified.
· Further, there is no requirement for major treatment such as surgery or radiotherapy in order for a benefit to be paid.
Macquarie Life Active also provides a hospitalisation benefit that is not covered in your existing products.
In reality, most early stage malignant tumours can be extracted or removed using surgery, with little subsequent risk of the cancer spreading to other parts of the body. While you would undoubtedly be shocked and concerned for your future on hearing the diagnosis, the financial loss would most likely be minimal beyond loss of earnings while in hospital and recuperating. In this situation a lower level of benefit may be necessary than if the cancer develops to the stage where is is incurable. Macquarie Life Active pays smaller, living benefits at early stages in the development of the condition that would not be paid under your existing traditional product/s.
The bottom line here is that Macquarie Life Active can start paying partial benefits significantly earlier than your traditional policy/ies. Should you suffer a health event you are more likely to qualify for a benefit payment with Macquarie Life Active than you are with your existing traditional policies.
Goal : You wish to review your existing insurance coverage in terms of cost effectiveness and also the appropriateness of the level of cover.
Benefit : Relative to your existing traditional insurance policy/ies, Macquarie Life Active provides benefits that are more closely aligned with the severity of the medical condition concerned and with the resulting expected costs and loss of earning capacity incurred by the insured person. It also provides partial benefits in a broader range of circumstances than your existing products in the early stages of the development of the medical condition concerned. Overall, these differences result in lower premium costs. For these reasons we recommend you replace your existing traditional insurance policy/ies with a Macquarie Life Active policy.
It is important to understand that for some benefits the severity payments under Macquarie Life Active will pay less than some traditional products.
Goal : You have a budget for life insurance premiums of $XX per annum (currently funding your existing insurance policies) and you are seeking a higher sum insured for the major health events than you currently enjoy with your existing insurance policies.
Benefit : Relative to your existing traditional insurance policy/ies, Macquarie Life Active provides benefits that are more closely aligned with the severity of the medical condition concerned and with the resulting expected costs and loss of earning capacity incurred by the insured person. It also provides partial benefits in a broader range of circumstances than your existing products in the early stages of the development of the medical condition concerned. Overall, these differences result in lower premium costs for the same level of cover. Or in your case, higher benefit levels for the same premium cost. For this reason we recommend you replace your existing traditional insurance policy/ies with a Macquarie Life Active policy
It is important to understand that for some benefits the severity payments under Macquarie Life Active will pay less than some traditional products.
1.3 Straight Replacement Benefits (not goal related)
Trauma replacement : Your existing traditional trauma product/s are structured to pay a single benefit amount, upon diagnosis of a specific health condition. This can be a less flexible structure than that offered by Macquarie Life Active where different levels of benefits are paid depending on the medical outcome, and importantly, its severity. This has influenced our decision to recommend you replace your existing traditional trauma product/s with a Macquarie Life Active policy.
It is important to understand that for some benefits the severity payments under Macquarie Life Active will pay less than some traditional products.
TPD replacement : Your existing traditional TPD product/s are structured to pay a single, benefit amount, , upon acceptance by the insurer of your inability to engage in <your own occupation / any occupation for which you are reasonably suited through education, training and work experience>. This can be a less flexible structure than that offered by Macquarie Life Active where benefits are paid in the event of specific medical conditions which have the effect of rendering you totally and permanently disabled.