Reference no: EM133113439

ACFIN202A Insurance Planning - TAFE NSW

Case Study: Develop Insurance Portfolio for the Williams family

Goals & Objectives:

Following discussions with James and Fiona, find their agreed goals and objectives as follows:

1. Ensure a net income of $125,000 per annum is available to maintain living expenses.

2. Maintain a cash reserve of $30,000.

3. They would like to know if investing somewhere else would be better than paying off the mortgage first.

4. They are interested to know benefits of inside/outside super and appreciate any advice applicable for them such as salary sacrifice.

5. Ensure their income is replaced in the event of an accident or illness while employed, and both James and Fiona intend to retire at age 65.

6. Ensure they have adequate Life, Total Permanent Disability (TPD), Trauma and Income Protection insurance in place.

7. Explore any other personal insurance covers that they may require such as private health insurance.

8. It is James and Fiona's desire that their children have the opportunity to go to university after completing their high school. They estimate that schooling will last from age 13 to 25. To provide for this, they estimate that $250,000 should be set aside for both children.

9. Fiona's mother, Sara is living with the family. She is 66 and receives a lifetime annuity earnings of around $16,000 per year that covers her incidental expenses. James and Fiona meet her other expenses, which amount to $550 per month.

» You need to ensure that you highlight the benefits and the risk of the scaled advice relevant to the client's personal circumstances.
» Analyse and address James and Fiona's goals, objectives, needs, and concerns and whether they can and if so then how to achieve their objectives. (You are strongly advised to provide them with options and alternatives where necessary and appropriate).
» For the personal insurance, you are required to provide a clear need analysis and make appropriate recommendations on the amount and type of covers required. You also need to provide insurance product recommendations and supply quotes of premiums. Insurance advice must consider the issue of inside/outside of superannuation. You will also explore general and health insurances.
» Projections should be made up to James & Fiona's life expectancy + 5 years.

Risk Profiling - James and Fiona's attitude to risk:
James and Fiona have both indicated they would not mind taking some calculated investment risks to help them achieve their objectives.

1. Current situation:

• Building and structuring the client current situation (including pre advice cash flow and net worth)
• Clearly analysing the fact in the case study
• Appropriately addressing ALL the client goals, objectives, needs, concerns and special circumstances
• Providing a client with strategy that addresses ALL the client goals, objectives and concerns and aims to meet the client goals
• Providing client with options and solutions - providing alternative strategies
• Highlighting how the strategy is in the best interest of the client - i.e. meeting the best interest duty
• Highlighting the risk of the strategy (if any)
• Addressing how the risks can be mitigated
• Providing post advice cash flow and net worth & the requested projections going forward
• Providing specific product recommendations to execute the strategy
• Obtaining Authority from the client to proceed with the recommendation

2. Risk profile section - you are required to address the key issues and justify accordingly. You therefore needed to make clear reference to how you determine the client risk profile (Client risk tolerance, Time horizon, Goals and objective, Liquidity needs and investment experience, etc.)

3. Switching Advice: All switching advice (superannuation, investment and insurance) need to be clearly justified.

4. Product Research: All product recommendations must be supported by appropriate product available in the market. You must show the research work in identifying, comparing and selecting the product in the appendix section.

5. Projections: Clear cash flow and net worth projection to be provided - you need reference to your projection in the body of the SOA in relation to the specific goals (i.e. retirement funding, etc.) Cash flow projections and net worth projections to justify strategy and demonstrate if financial goals and objectives are met.

6. Presentation - needs to be professionally presented and your SOA document must flow nicely and need to be reader friendly

7. Disclosure & Compliance - Appropriate disclosure of fees and benefits and meeting the regulatory requirement of advice documentation

8. Technically accurate advice - It is critically important to provide accurate advice for the client to rely on. Again, always relate to the clients' specific circumstances throughout the SOA and ensure you are specific when explaining concepts, rules, regulations and legislative changes in terms of highlighting their impact on the clients specific and relevant.

Attachment:- Insurance Planning Case study.rar