Instructions to students

• This assignment covers Topics 1 to 7 and accounts for 40% of your final grade.
• There are two (2) sections in this assignment:

–    Section A contains three (3) short-answer questions worth 25 marks.

–    Section B contains four (4) long-answer questions worth 75 marks.

You should answer all questions.

• The overall word limit for the assignment is 3,400 words. Marks will only be awarded for answers up to the word limit (plus 10%) for each question. Any material written after this will not be counted towards your mark for that question. Headings, quotes and references within the body of the answer are included in the word count. Numerical tables, calculations, and reference lists are not included. For more information on word counts and their rationale, go to Assessment à Assignment à General assessment information.
• Refer to the Criteria-based Marking Guide for guidelines on what is expected for each question.
• The ‘General assessment information’ section in KapLearn contains information about format and presentation, word limits, citations and referencing, collusion, plagiarism and other policies, useful resources, submitting your assignment and accessing your results.
• Full workings must be shown for all calculations. Show all calculations in the text of your assignment and NOT attached as an appendix. Appendices to assignments will not be read.
• Answers are to be in your own words. Reference and cite all your sources (within the text of your answer) when quoting or using material from external sources. Include a reference list at the end of your assignment. Refer to the ‘Referencing and Citations Guide’ available from the ‘Library and Resource Centre’ in KapLearn for further information on referencing.
• Indicative weightings are noted beside each question. Use these weightings to assist you with your allocation of time and resources. The weightings indicate the relative importance of each question.
• State all assumptions used in providing your answer.

•             Requests for special consideration or information pertaining to special consideration written in the body of the assignment will not be considered by the marker. Refer to the ‘special consideration’ section of the Assessment Policy on Kaplan’s website for more information.

Section B (75 marks)

This assignment covers Topics 1 to 7 and accounts for 40% of your final grade. Please see attached

Question 1     (35 marks | Word limit: 1000 words)

LO3: Develop and implement personal and small business risk management strategies using a range of life insurance policies.

LO5: Evaluate contemporary issues in insurance advice.

You have just met with a new client who has been referred to you for advice on her life insurance needs and has completed a fact find with the following information.

Anna is age 38 and has one dependant child — her son, Jason, who is 10. She works as a commercial artist and earns a salary of $90,000 p.a. Her employer pays 9.5% superannuation guarantee contributions into its default superannuation fund, which has a current balance of $100,000. Anna has no personal insurance cover (although her superannuation fund offers life, TPD and salary continuance insurance options).

After her husband died a year ago, Anna used his life insurance payout to reduce debts to a more manageable level. She and Jason still live in their family home (estimated value $700,000). There is a remaining mortgage of $150,000. Anna also has a car loan of $10,000 and credit card with a limit and current balance of $5,000. There is $40,000 in a cash management account, which is a combination of the remaining life insurance payout and Anna’s savings towards Jason’s secondary school fees.

You have learned that Anna’s goals are as follows:

• Anna has confirmed she only wants advice on life insurance at this stage, but is happy for you to provide her with information on other types of personal insurances she might consider later on.
• On her death, she would want Jason to inherit the house free of debt, and have all her other debts and any expenses incurred at that time paid. Anna’s sister would act as Jason’s guardian and move into the house with him. You have discussed and agreed on an allowance for funeral expenses ($15,000), final medical expenses ($20,000), tax and legal costs ($15,000), and an emergency fund ($20,000).
• In two years’ time, Jason will attend a private secondary school for five years and university after that for three years (allowing $15,000 p.a. for this).
• So that Jason will not be a financial burden on Anna’s sister, she wants to make provision for an annual living cost amount for Jason of $26,000 until he completes university.
• Anna does not want you to include the $40,000 cash in your calculations, but is happy for the superannuation balance to be included as an asset that could be used to pay out debt or provide for Jason.
• (a)       (i)        What full lump sum life cover would be appropriate for Anna? Ensure you provide full substantiation of your calculations. (11 marks)

  (ii)       Outline the premium strategy that would be most appropriate for Anna and in substantiating your answer, ensure you provide the advantages and disadvantages of the different premium options available (premiums are not required to be calculated or shown). (5 marks)

  (iii)      What other personal insurance advice would you provide to Anna? (9 marks)

  (b)       Outline the step-by-step process of how you would present and implement this advice with Anna. This includes your client engagement, compliance and legislative requirements as well as the underwriting process. (10 marks)

  Criteria-based Marking Guide for Section B: Question 1(a)–(b)

  	Excellent	Satisfactory	Unsatisfactory
  (a)	•  life insurance calculation components and amount correct and fully supported by well set-out calculations •  comprehensive explanation of pros and cons of stepped vs level premiums •  comprehensive identification and explanation of other suitable personal insurances, and why they are applicable to client	•  majority of life insurance calculation components and amounts correct and supported by calculations •  adequate explanation of pros and cons of stepped vs level premiums •  adequate identification and explanation of other suitable personal insurances and brief discussion of why they are applicable to client	•  majority of life insurance calculation components and amounts incorrect. Inadequate support by calculations •  inadequate explanation or demonstrated understanding of pros and cons of stepped vs level premiums •  key potentially suitable personal insurances not considered or inadequately explained, or inadequate application to case study facts
  (Range: 25 marks)	(Range: 19–25 marks)	(Range: 12.5–18.5 marks)	(Range: 0–12 marks)
  (b)	•  all components of question comprehensively addressed and illustrated with examples	•  all or most of components of question adequately addressed, with brief examples provided	•  most or all components of question inadequately addressed or understood and few or no examples provided
  (Range: 10 marks)	(Range: 7.5–10 marks)	(Range: 5–7marks)	(Range: 0–4.5 marks)

  Insert your answers to Section B: Question 1(a)–(b) below this line

   

  End of answers to Section B: Question 1(a)–(b)