FPC004_AI2_v9A1

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Kaplan Business School *

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Jan 9, 2024

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Document classification: Confidential FPC004 Insurance Advice Assignment 2 Instructions Assignment 2 marks: 75 | Referencing and presentation: 5 Total marks: 80 Total word limit: 2,200 words Weighting: 40% Download and use the Assignment 2 Answer Template provided in KapLearn to complete your assignment. Your assignment should be loaded into KapLearn by 11.30 pm AEST/AEDT on the due date. Refer to ‘Time remaining’ on the ‘ Assignment 2 ’ page in KapLearn to ensure you submit your assignment by the specified due date and time. Learning outcomes (LO) mapping Marks LO1 Critically analyse and evaluate personal, property and small business risks. 15 LO2 Describe and distinguish between the features of the various types of life and general insurance products, including related taxation issues. 17 LO3 Apply ethical, legal and regulatory practices in a financial planning context. 8 LO4 Develop effective personal and small business risk management strategies incorporating the implementation of relevant insurance solutions. 35 Referencing and presentation 5 Total marks 80

Document classification: Confidential FPC004_AI2_v9A1 2 © Kaplan Higher Education Assignment 2 details • This assignment covers Topics 1 to 2 and Topics 5 to 8 and accounts for 40% of your final grade. • There are five (5) short-answer and long-answer questions in this assignment. Answer all questions. • Marks will be awarded for referencing and presentation. • Your overall mark for this assignment will be rounded to the nearest whole number. • Refer to the Criteria-Based Marking Guide for guidelines on what is expected for each question. • This assignment is based on a case study and all questions relate to the facts detailed in the case study. • 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 the assignment will not be read. • 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. Policies • 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 → Assignment 2 → Assessment Preparation Guide . • The Assessment Preparation Guide 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. • 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. • Use of the Harvard referencing style is recommended (as per Kaplan Australia: Harvard Referencing Guide, available from the ‘Referencing and Research’ section of the ‘Build Your Skills’ hub in KapLearn), but the consistent application of any other referencing style will also be accepted. • Requests for special consideration or information pertaining to special consideration written in the body of the assignment will not be considered by the assessor. Refer to the ‘special consideration’ section of the Assessment Policy on Kaplan’s website for more information. Independent research For some or all questions in this assignment, you will be required to complete independent research beyond the provided materials. You will also be expected to analyse this research and use it to support your own reasoned conclusions. This includes: • consideration of multiple sources beyond topic notes or other provided resources • sources included are academically sound and credible • analysing and understanding the argument or information the source presents • using the material appropriately to directly support your conclusions. Where significant independent research is required for a given question, it will be clearly indicated in the question instructions and the Criteria-Based Marking Guide.

Document classification: Confidential FPC004_AI2_v9A1 3 © Kaplan Higher Education Assignment 2 referencing and presentation (5 marks) Your assignment should be presented in a clear and appropriate format, with all sources correctly referenced and cited. You are required to: • structure a clear response to each question, using headings if required • number questions (including sub-questions) and pages • use correct font style and size • ensure tables or graphs are clearly labelled and readable • clearly set out calculations or workings, where they are required • adhere to the assignment word limit • cite sources and provide a reference list at the end of your assignment. It is recommended to use Kaplan Professional’s preferred referencing style, Harvard (see Kaplan Australia: Harvard Referencing Guide , available from the ‘Build Your Skills’ hub in KapLearn) , but the consistent application of any other referencing style will also be accepted. Criteria-Based Marking Guide for referencing and presentation The Criteria-Based Marking Guide (CBMG) provided at the end of each question is designed to assist you to understand what is expected of you in each question and to let you know how your performance will be judged. It provides advice about the criteria used in the marking of the question and what discriminates between an excellent, satisfactory and unsatisfactory answer. The below CBMG outlines the expectations for referencing and presentation in this assignment. Excellent (Mark range: 4 – 5 marks) Satisfactory (Mark range: 2.5 – 3.5 marks) Unsatisfactory (Mark range: 0 – 2 marks) • clear response structured for each question, including use of headings where appropriate • all page and question numbers included • correct font style and size used consistently throughout • all tables and graphs clearly labelled and readable • clearly set out all calculations or workings, where required • adheres to assignment and question word limits • external sources cited accurately throughout the assignment and included in reference list, using any consistent referencing style • adequate response layout and structure for each question, with some use of headings where appropriate • most page and/or question numbers included • correct font style and size generally used, with some inconsistencies • most tables and graphs clearly labelled and readable • unclear layout of some calculations or workings • adheres to assignment and most question word limits • external sources mostly cited accurately throughout the assignment and in reference list using any referencing style; some errors • poor response layout and/or structure for each question with little to no use of headings • few or no page and/or question numbers included • application of font style and size has significant inconsistencies • tables and graphs have little to no labelling or are difficult to read • unclear layout of most calculations or workings • assignment is significantly under or over the word limit • no or inaccurate use of referencing throughout the assignment and reference list, and/or no reference list provided

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Document classification: Confidential FPC004_AI2_v9A1 4 © Kaplan Higher Education Case study You meet again with Aman (age 42) and Juanita (age 37) from Assignment 1 to review their personal insurance needs. Aman and Juanita have four children: • Sara (age 19) currently attending university and not working • Jamile (age 17) completing Year 12 and likely to go to full-time employment on apprenticeship • Katih (age 14) completing Year 9 and likely to go to university. She has been a paraplegic since birth due to a spinal cord injury • Karla (age 9) completing Year 3. Aman and Juanita’s objectives are to ensure that if either of them dies, suffers a serious illness or is temporarily or permanently disabled, they want: • to be able to afford for either of them to take six months leave of absence from work as the surviving spouse or carer for their disabled/ill spouse • a buffer of $100,000 to cover medical treatment, or additional home care support • to support each child ’s education/apprenticeship allowing for $5,000 p.a. for each child until they reach age 23. Aman and Juanita would like to replace their annual income if they were unable to work again. They have noted the following: • They do not want a serious illness or injury to put them in an adverse financial position that would make it difficult for them to retire in 25 years. • Aman is in good health but he is a heavy smoker. Juanita does not smoke but has high blood pressure and high cholesterol which her prescribed medication for this doesn’t seem to be controlling well. • They want ‘value for money’ on the insurance premiums they have to pay and not over-insure. Following are the details of their personal situation, assets and liabilities, cash flow and current insurance situation. You will need this information to complete the questions in this section. You can refer to Assignment 1 to review their business details.

Document classification: Confidential FPC004_AI2_v9A1 5 © Kaplan Higher Education Personal information Surname Khan Khan Christian name Aman Juanita Salutation Mr Mrs Age/Date of birth 42 37 Status Married Married Home address 28 Market Way, Townside 28 Market Way, Townside Occupation Manager and business operator Sales and clerical Employer Homeware Galore (self-employed) Homeware Galore (self-employed) Years self employed 5 years 5 years Sick leave currently available Nil Nil Smoking status Smoker Non-smoker Health Excellent, no issues High blood pressure and cholesterol Retirement age 67 62 Assets and investments Lifestyle asset Owner Value Details Principal residence Joint tenants $1,100,000 Mortgage outstanding $250,000 10-year term, 4.7% P&I (repayments $32,000 p.a.) Contents Joint $80,000 Insured value Car: 2022 Holden Commodore Aman $45,000 Fully paid off Car: 2016 Audi Q7 Juanita $45,000 Fully paid off Financial asset Owner Value Details ANZ mortgage offset account Joint $40,000 Available in emergencies/illness REST Super Aman $210,000 100% Core Strategy (My Super default) Standard default insurance in place REST Super Juanita $175,000 100% Core Strategy (My Super default) Standard default insurance in place Homeware Galore (business) Aman and Juanita $1,280,000 Valuation provided end of financial year: • Goodwill $650,000 • Operating bank account $150,000 • Equipment $130,000 • Stock on hand $350,000

Document classification: Confidential FPC004_AI2_v9A1 6 © Kaplan Higher Education Annual income and cash flow details Details Aman Juanita Combined Salary $80,000 $80,000 $160,000 Total income received $80,000 $80,000 $160,000 Tax payable including Medicare and offsets (2022/23) $18,067 $18,067 $36,134 Total mortgage repayments $32,000 Total general expenses $78,000 Net cash flow $13,866 Insurance and risk management This is a summary of Aman and Juanita’s life insurance situation. Insurance Owner Cover Premiums and details Life Aman $387,500 Premium $6.75 p.w. TPD Aman $28,600 Premium $0.82 p.w. Income protection Aman $2,125 per month Premium $6.40 p.w. 90-day waiting period – benefit period five years Life Juanita $381,000 Premium $6.75 p.w. TPD Juanita $28,600 Premium $0.74 p.w. Income protection Juanita $2,125 per month Premium $4.20 p.w. 90-day waiting period – benefit period five years The above insurance is the default insurance cover in their REST Super accounts. Personal needs and assumptions They would also like you to explain any government assistance that might be available in the event of death or disability. Business needs and assumptions If death or disability occurs for either of them, they believe the business’ s operating bank account balance of $150,000 would be sufficient to cover business overheads for six months. The business has no debts to be repaid.

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Document classification: Confidential FPC004_AI2_v9A1 7 © Kaplan Higher Education Question 1 (10 marks | Word limit: 250 words) Devise ten (10) relevant questions you would ask your clients to find out more about their personal insurance needs. Explain the purpose of each question, i.e. how the clients ’ response can help you to determine their personal insurance cover requirements. (10 marks) Present your responses in the following table format. Question Purpose of question Criteria-Based Marking Guide for Question 1 Excellent (Mark range: 8-10 marks) Satisfactory (Mark range: 5-7.5 marks) Unsatisfactory (Mark range: 0 – 4.5 marks) • Developed 8-10 relevant questions • Clear and detailed explanation of purpose of each question, justification relates back to the client s’ situation. • Developed 6 to 8 relevant questions • Explanation of the purpose of each question in relation to the clients’ situation is clear but requires further detail • Developed 5 or fewer relevant questions • Unclear, incorrect or no explanation provided on the purpose of each question

Document classification: Confidential FPC004_AI2_v9A1 8 © Kaplan Higher Education Question 2 (20 marks | Word limit: 500 words) Aman and Juanita would like you to advise them on addressing their personal insurance requirements. In your response, discuss the different types of personal insurance cover and calculations for determining the level of cover each of them would require. Where there is insufficient information in the case study, you can either make a reasonable assumption (supported by reference to the case study and/or external research) or specify the item that would need to be considered without providing a value. Mark breakdown: • Analysis of required insurance cover (12 marks) • Analysis of available financial resources and existing insurance coverage (4 marks) • Insurance gap analysis (4 marks) Criteria-Based Marking Guide for Question 2 Excellent (Mark range: 16 – 20 marks) Satisfactory (Mark range: 10 – 15.5 marks) Unsatisfactory (Mark range: 0 – 9.5 marks) • Clear and comprehensive discussion of types and amounts of insurances needed to meet clients’ insurance needs • Calculations are correct and workings fully shown • Clear and comprehensive assumptions justifying the basis for clients’ insurance needs • Mostly adequate discussion of types and amounts of insurances needed to meet c lients’ insurance needs • Calculations are mostly correct, with workings shown • Adequate assumptions underpinning the basis for clients’ insurance needs • Inadequate discussion of types and amounts of insurances needed to meet clients’ insurance needs • Calculations are missing, incorrect or inadequate • Inadequate assumptions underpinning the basis for clients’ insurance needs

Document classification: Confidential FPC004_AI2_v9A1 9 © Kaplan Higher Education Question 3 (20 marks | Word limit: 700 words) Following on from your analysis above, you must prepare your personal insurance advice for Aman and Juanita by providing the following for each type of personal insurance cover: (a) An outline of all their policy ownership options. (4 marks) (b) An explanation of one advantage and one disadvantage for two ownership options — do not duplicate answers . (10 marks) Present your responses to part (b) in the following table format. Cover Type Ownership Type Advantage Disadvantage In your advice you also need to: (c) Discuss the different TPD definitions and justify the best option for their situation. (3 marks) (d) Explai n the meaning of ‘waiting period’ and ‘benefit period’ for income protection policies and justify your choice of periods for their situation. (3 marks) Criteria-Based Marking Guide for Question 3(a) – (d) Excellent Satisfactory Unsatisfactory (a) • Outlined all relevant ownership options for all relevant types of cover • Outlined most of the ownership options for most relevant types of cover • Inadequately outlines or omits key ownership options for most relevant types of cover (Range: 4 marks) (Range: 3 – 4 marks) (Range: 2 – 2.5 marks) (Range: 0 – 1.5 marks) (b) • Well-articulated identification and explanation of two valid ownership options with an advantage and disadvantage for each. • Adequate identification and explanation of two valid ownership options with an advantage and disadvantage for each • Inadequate or missing identification and explanation of two valid ownership options with an advantage and disadvantage for each (Range: 10 marks) (Range: 8 – 10 marks) (Range: 5 – 7.5 marks) (Range: 0 – 4.5 marks) (c) • Clear and comprehensive discussion of TPD definitions and best option for clients clearly justified • Adequate discussion of TPD definitions and best option for clients mostly justified • • Inadequate or missing discussion of TPD definitions and justification for best option for clients unclear or irrelevant (Range: 3 marks) (Range: 2.5 – 3marks) (Range: 1.5 – 2 marks) (Range: 0 – 1 mark) (d) • Clear and comprehensive explanation of both terms and choice of periods for clients clearly justified • Adequate explanation of both terms and choice of periods mostly justified • Inadequate or missing explanation of both terms and justification for best option for clients unclear or irrelevant (Range: 3 marks) (Range: 2.5 – 3 marks) (Range: 1.5 – 2 marks) (Range: 0 – 1 mark)

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Document classification: Confidential FPC004_AI2_v9A1 10 © Kaplan Higher Education Question 4 (15 marks | Word limit: 400 words) Describe the steps and procedures to implement your recommendations for Aman and Juanita. In your response, you should include: (a) All of your key compliance obligations as a financial adviser, and the relevant documents you would require Aman and Juanita to read, complete and sign. (5 marks) (b) A brief summary of the underwriting that may be required for the insurances you have recommended. (5 marks) (c) Five events that would likely trigger a need to review their personal insurance needs and what impact they could have. (5 marks) Criteria-Based Marking Guide for Question 4 (a) – (c) Excellent (Mark range: 12 – 15 marks) Satisfactory (Mark range 7.5 – 11.5 marks) Unsatisfactory (Mark range: 0 – 7 marks) • Clear and comprehensive explanation of all key compliance obligations and required client documentation • Well-articulated discussion of underwriting requirements for all recommended insurances • Clear and comprehensive identification of five trigger events and accompanying impacts • Adequate explanation of most key compliance obligations and required client documentation • Adequate discussion of underwriting requirements for recommended insurances • Adequate identification of five trigger events and accompanying impacts • Inadequate or missing explanation of key compliance obligations and required client documentation • Inadequate discussion of underwriting requirements for recommended insurances • Inadequate identification of five trigger events and accompanying impacts

Document classification: Confidential FPC004_AI2_v9A1 11 © Kaplan Higher Education Question 5 (10 marks | Word limit: 350 words) For this question, refer to the AIA product disclosure statement (PDS), which can be downloaded from the following website link: < www.aia.com.au/content/dam/au/en/docs/policy- docs/Priority_Protection_Product_Disclosure_Statement.pdf >. Assuming Aman and Juanita have AIA insurance policies, answer the following questions: (a) If they are diagnosed with cancer, is this a condition for a life insurance policy benefit payment? Give reasons for your response. (2 marks) (b) Can they be paid a benefit under their trauma policy ($100,000 cover with no rider benefits) if any of their children were diagnosed with cancer? Give reasons for your response. (2 marks) (c) Would the loss of a leg due to amputation satisfy the definition of total and permanent disability under their TPD policy, entitling them to an immediate benefit? Give reasons for your response. (2 marks) (d) If Aman became hospitalised for two months due to a stroke while overseas, would Juanita qualify for any benefit under his trauma policy? Give reasons for your response. (2 marks) (e) Under what occupation category are they most likely to be classified for their income protection policies and why this would be the case, based on their duties? (2 marks) Note: As there are many potential variations between insurers, for this question, one insurer has been selected for consistency. Criteria-Based Marking Guide for Question 5 (a) – (e) Excellent (Mark range: 8 – 10 marks) Satisfactory (Mark range 5 – 7.5 marks) Unsatisfactory (Mark range: 0 – 4.5 marks) • Clear and well-articulated responses with comprehensive justifications (including PDS references) for all questions • Adequate responses with supporting justifications (including PDS references) for most questions • Inadequate or missing responses and/or supporting justifications (including PDS references) for most questions

Document classification: Confidential FPC004_AI2_v9A1 12 © Kaplan Higher Education Ready to submit? ✓ I have completed my assignment using Word. ✓ I have completed my assignment using Calibri, Arial, Times New Roman or Verdana fonts and a minimum font size of 10 points. ✓ I have added my Student No. and word count on the Assignment 2 Answer Template. ✓ I have answered all questions (and clearly labelled any parts) under each question heading provided in the Assignment 2 Answer Template. ✓ I have saved the file to be uploaded as: StudentNo_FPC004_AAT2_v9A1 . ✓ Each question of my assignment is within the word limit for that question and adheres to the guidelines in the Assessment Preparation Guide . ✓ My assignment file size is no larger than 20 MB. ✓ If tables were required, they are visible as text, not as links or images. ✓ If calculations were required, I have shown all workings and calculations as instructed. ✓ I have referenced and cited all source materials using the recommended Harvard referencing style (or the consistent application of any other referencing) and, if required, included a reference list at the end of my assignment. ✓ I have submitted my assignment as one (1) Word or PDF file as per the instructions in KapLearn. END OF ASSIGNMENT 2 INSTRUCTIONS

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