How to solve a problem like TPD?

Zurich introduces new assessment criteria as part of an innovative rethink of misunderstood cover.

An insurance purchase generally entails an expectation that when the ‘wheels fall off,’ financial loss is compensated by an equivalent claim payment.

Historically some total and permanent disability (TPD) contracts, have fallen short of this expectation as claimants are required to be injured to the extent they’re deemed unlikely to ever work again. This severity benchmark and occupational claim hurdle have contributed to recent media coverage around TPD claim denial rates and the frequently held misconception that you virtually have to be permanently hospitalised to claim against TPD. with such disconnect between financial loss and claim outcome, it is easy to see why some observers have questioned the value of TPD.

Contrary to the idea TPD claims are ‘pigs might fly’ type events, or life insurers might force a librarian to work as a truck driver, Australian life insurers pay hundreds of millions of dollars in TPD claims each year. In reality, we know TPD can be a vitally important part of the protection strategy and the financial assistance it provides changes lives, but with that said, it’s important to acknowledge that not all TPD contracts are created equal.

As part of its recent risk product overhaul, Zurich has re-engineered its TPD offering by adding a number of additional – non-occupation based  – assessment criteria to flagship Wealth Protection product.

Zurich’s medically based claims alternative that alleviates reliance on a client’s future ability to work is known as extended activities of daily living (Extended ADLs). To further improve the confidence around the TPD conversation and better align claim outcomes with client expectations, a partial and progressive payment system is also available through Zurich’s platinum TPD feature.

Extended ADLs – moving beyond the self-care definition

It’s critical to acknowledge that whilst most traditional TPD products include a form of ADL cover, Zurich’s approach is distinctly different.

The extended ADL framework captures a much broader range of assessment criteria’s and qualifying benchmark at claim time are considerably more lenient. For example, whilst traditionally ADLs centre around the claimant’s ability to self-care, Zurich’s approach expands the qualifying criteria to include an individual’s functional status across the following six categories:

  1. Self-care
  2. Communication
  3. Physical activity
  4. Sensory function
  5. Hand functions
  6. Advance functions.

So let’s look at the practical application and the benefits the extended ADL framework con deliver clients.



Education key in combating elderly financial abuse

Education key in combating elder financial abuse

Financial advice practices will be able to equip staff with greater knowledge and understanding around identifying and preventing elder financial abuse through a selection of new education and training materials.
Protecting Seniors Wealth has launched a range of resources including presentations, training courses, and publications to create awareness and assist in developing strategies to deal with senior and elder financial abuse efficiently.
The company believes financial planners are in a unique position to assist in protection seniors and their wealth as they assist in the management of their finances and so should incorporate this sort of training into their business plains, promoting trust and building on their business’ reputation.
“Seniors and elders are prime targets, they hold the largest share of wealth and often need assistance dealing with unwanted financial predictors, and the focus is on the seriousness of this issue – rapid increases, how seniors are impacted how much money and assets are being stolen.” Protecting Seniors Wealth chief executive Anne McGowan
“its motivational and provides opportunity to relate in terms of possible loss of their own clients and funds, providing strategic insight and knowledge for assisting to be money gatekeepers.”
McGowan believes the findings of the Australian law reform commission’s inquiry into Elder Abuse will indicate the need for more education, with the new resources working toward fulfilling the need.
“The disturbing consequences of this form of abuse are so profound that when financial perpetrators take senior elders money and assets, they often also take the funds they need for their lifestyle and age care, along with their dignity and the inheritance they plan to leave loved ones, resulting in the final insult – inheritance being stolen or taken as well,” McGowan said.
Resources from Protecting Seniors Wealth can also be tailored for CPD accreditation.
Separately, the Australian Tax Office (ATO) is reminding Australians to stop and think before giving their personal details or hard earned money to scammers this tax time.
Assistant Commissioner Kath Anderson said 48,084 scams were reported to the ATO between July and October last year.
“we have already seen a Five-fold increase during the tax time period,” Anderson said.
“Already this year, the ATO has registered over 17,067 scam reports. Of these, 113 Australians handed over $1.5 Million to fraudsters with about 2500 providing some form of personal information including tax file numbers.”


Value of advice still unclear: IOOF

Value of advice still unclear: IOOF

Australians are still dissuaded by the cost of seeking financial advice, despite those that receive financial advice being 21% more likely to have greater peace of mind.
IOOF believes the benefits of advice must outweigh the cost in order for clients to value it with not everyone needing it to produce tangible financial benefits.
“Simply put, clients value advice provided it meets a particular need. . . For some, value comes from those intangible benefits, such as sleeping better at night, while for others value lies in the more tangible benefits, such as tax minimisation, above average returns or low fees,” IOOF group general manager, wealth management Renato Mota said.
Mota believes financial planners need to demonstrate their value more when it comes to fee discussions and allow clients to determine what constitutes ‘value’.
“rather than leading with the vague and intangible term ‘value, when the vague and intangible term ‘value’ when discussing fees, it will be more useful to provide the full list of services you offer and clearly show why your fees are a fair reflection of those services,” Mota said.
“If you include intangible benefits of advice, such as counseling against destructive client behavior, as part of your conversation with clients, it’s important to be specific on how this is a service which adds value to their portfolio.”
Mota reinforced the undeniable appeal of low fees too, saying it’s inevitable that some clients will view cost as the yardstick of value and there are simple ways to reduce fees.
IOOF encourages planner to consider improved passive investments delivering returns above traditional benchmark indices at a lower cost. It also highlights fee aggregation as a great way for clients to limit the number of administration fees paid.
“As investors become more cautious about their spending, having a clear link between fees charged and the service which provides value will become more important. For some clients finding a way to offer lower fees will be crucial, but it should be remembered – cheaper financial advice doesn’t make it better, it’s just cheaper.” Mota said.


Shorten attacks government

Shorten attacks government’s retro super changes

Federal Opposition Leader Bill Shorten used his budget reply speech to label the government’s superannuation changes as “retrospective” and reaffirm labor’s election policy on the $2 trillion industry.

The government announced a $500,000 lifetime cap will be applied to after-tax concessions on superannuation as part of the wider agenda to slow retirement savings being purely wealth accumulation for higher income Australians. The measure will include contributions backdated to 2007.

Shorten called out this retrospective view, yet also used his budget reply to accuse the government of pinching Labors superannuation ideas.

“Labor will gladly support our own clear and costed policy to close the unsustainably generous superannuation loopholes at the very top end. We welcome the fact that, three years after they voted to abolish Labor’s low-income superannuation contribution the Liberals have decided to keep it and simply rename it,” Shorten said.

He added the government was dangerously undermining super by claiming 4% of Australians in the super system will be affected by a budget change. He also took a shot at the government’s proposal to remove regulations that restrict people between 65 and 75 from making contributions to their superannuation.

“Labor will never apologise for standing up for Australians who go to work every day and want to come home safe, who rely on penalty rates to make ends meet, who do not want to be forced to work until they are 70,” Shorten said.

Shorten further announced a range of measures that would see $71 billion of “additional budget improvements over the decade.”

Labor still proposes a 25% tax cut for small businesses with a turnover of less than $2 million a year and delivering 50% renewable energy by 2030. It also backs its plans to “turbocharge” Infrastructure Australia with a new $10 billion funding facility, ” a concrete bank to get investment from the private sector, particularly big super funds, flowing into projects.” Labor says their infrastructure projects would add 26,000 jobs.

Labor is not supportive of budget measures that give the richest 3% of Australians another tax cut and reducing the marginal tax rate for individuals who earn more than $180,000 a year.


budget changes

Advisers not impressed with budget changes

More than 50% of advisers believe that the federal budget will have a negative impact on their clients but agree that it will drive and increase in the need for advice, according to a survey from Midwinter.

The survey garnered responses from 103 Australian advice practitioners to develop an understanding of the planning industry’s initial responses to this year’s budget and how they believe their clients will be affected.

The majority 87.3% of respondents, said that they felt negative towards the proposed lifetime cap for no-concessional contributions of 500,000 and a further 86.4% said they felt negative toward the proposed lowering of the concessional contributions cap to $25,000. the removal of the TTR pension tax exemption was also unpopular; with a 73.5% of respondents saying it will negatively impact their clients.

Advisers did concede that the increased complexity of the superannuation system may drive more demand for advice, with 51% of respondents believing there will be an increase in people seeking advice. The introduction of the catch-up concessional contributions over a five-year period also gained support from advisers with 76.5% of respondents regarding it as a positive change from a planning perspective.

The survey revealed super splitting with a spouse, insurance bonds and spouse rebates as the top three strategies advisers will look to use to combat the proposed changes to superannuation, citing the 1.6 million cap as a major driver to implementing lesser used strategies.

[via Financial Standard]


Redundancy, and income support payments

[vc_row][vc_column][vc_custom_heading text=”Financial planners have an important role when you lose your job” font_container=”tag:h2|font_size:1.2em|text_align:left|color:%23262626″ google_fonts=”font_family:Open%20Sans%3A300%2C300italic%2Cregular%2Citalic%2C600%2C600italic%2C700%2C700italic%2C800%2C800italic|font_style:400%20regular%3A400%3Anormal”][vc_column_text]Redundancy can be a difficult time, and some Australians experience it at some point in their career.

After being made redundant, the logical next step for most people is to find work again, and this is one area where a Financial planner can provide support.

If you are made redundant we can provide a referral to an employment services provider. This is an important first step to assist you in finding work. In addition, there is a range of income support payments available while you are looking for work or undergoing activities, such as studying or training, to increase your chances of finding work.

These support payments include;

  • Newstart Allowance
  • Parenting Payment
  • Sickness Allowance
  • Youth Allowance
  • Widow Allowance
  • Austudy

Your application will be assessed against standard eligibility criteria. But any payouts they receive from their former employer can have implications as to the timing of when you can begin receiving income support payment.

The income maintenance period is a waiting period applied to you if you receive a redundancy a redundancy payout. This is a legislative requirement and it varies in length according to the size of the payout you receive.

For example, if you or your partner were made redundant and received a ten week payout, the department is required to assess your income maintenance period to be ten weeks.

This means he or she would have to wait ten weeks before receiving an income support payment from the department, provided the usual eligibility criteria for the payment is met.

If you spend a payout on expenses such as a holiday, a lump-sum mortgage payment, or lump-sum rent payment, it’s important to be aware this does not reduce the income maintenance period.

This is why it is important that you spend your payout in a way that won’t render you unable to cover essential costs during the waiting period.

However, there are exceptions. For example, if you were to spend the payout on expenses that are considered unavoidable or reasonable such as essential repairs to a car or home, or essential medical expenses, the department may be able to reduce the waiting period.

In some cases, you may receive a small payout and may be eligible for a part-payment during the income maintenance period.

It is highly recommended you make contact with the department to have income maintenance period assessed, even before receiving the payout, to effectively plan ahead.

The department can also provide assistance by linking you with employment service providers, social workers and financial information service officers.

For more information, visit and click on the “retrenched or redundant” tab.

[via Financial Planning magazine March 2016][/vc_column_text][/vc_column][/vc_row]

ING Direct FPA

ING DIRECT inks deal with FPA

ING DIRECT has signed a referral deal with one of Australia’s top financial planning associations that will benefit customers of its Living Super product.

Professional practices which are certified by the Financial Planning Association (FPA) will provide comprehensive financial advice to ING DIRECT Living Super members who ask for it, under a nine month pilot that starts next month.

“We see professional, independent, face-to-face financial advice as increasingly important to our customers in preparing for retirement,” ING DIRECT national partnership manager of residential and wealth, Tim Hewson said.

“In recent years we’ve seen an uptick in super consolidation and switching and increased demand for transparency and control. Australians want to get ahead with their super, which aligns with our proposition about helping our customers to get ahead through value, fairness and transparency.”

FPA chief executive Mark Rantall said that the partnership has been modeled on the one that the association recently signed with Cbus.

“It will help the FPA open more pathways to connect Australians to quality financial advice,” Rantall said.

The deal “strengthens our ties with the superannuation sector and brings us one step closer to achieving the FPA’s vision that through our members, we stand with Australians for a better financial future.”

The first FPA adviser consultation will be at no cost for Living Super customers and only a limited number of places for FPA Professional Practices will be available in the pilot stage.

Initial participation in the pilot referral program will be limited, based on geographic requirements.

via [Financial Standard]

Aussie consumers

Advice beats direct insurance for Aussie consumers

The majority of Australian consumers prefer to purchase insurance policies through financial advisers rather than directly.

This is the conclusion of Asteron Life’s Attitude to Life Adviser Insights report, which surveyed 1,515 Australians across every state. It found that 90% of respondents found life insurance too complex to navigate on their own, and consequently 65% were purchasing policies through financial advisers.

The report also showed that generation Y consumers are a high growth area for insurance advice; while only 21% in that category said they regularly saw an adviser, the report argued this presented a major opportunity as these consumers grow older and their financial risks increase accordingly.

“As more Australians move online to research and match their needs, there is, and will continue to be a need for personalised and professional advice,” said Asteron Life executive manager Mark Vilo.

“It’s essential for advisers to have an online presence and be seen where your clients are researching. By factoring this into your business strategy and the way you provide your service, you can use the power of the internet to help grow your business.”

He added, “As advice practices wind down for the holiday season there’s an opportunity for a period of reflection and some time to work on the business plan for the year ahead. Many Australians also use this time to reflect on their lives from both a personal and business perspective.

“Understanding the generational needs of your clients will facilitate meaningful conversations around their individual needs. It’s a good idea to segment your client base according to a combination of risk, income, generation and life stage and build this into discussions.”

via [Financial Standard]

Women in super

Women own less than 40% of super assets: ASFA

The share of superannuation assets held by women has plateaued over the past four years according to Australian Bureau of Statistics (ABS) data exclusively compiled for the Association of Superannuation Funds of Australia (ASFA).

Women now hold 36.4% of Australia’s superannuation assets but this number has remained steady in the four years to financial year 2013/2014. Women have also experienced a lesser percentage increase than men in average balance at the time of retirement, with the average balance for men increasing by 48.5% over the two years to 2013/14 compared to 31.6% for women.

ASFA chief executive Pauline Vamos said this reflected the different work patterns and earnings levels of men and women in their pre-retirement years.

“Even though account balances are increasing overall for women, the statistics still show that men are more likely to have superannuation than women, and also that men on average have a higher account balance. In many cases, broken work patterns and lower average wages still impede on women’s ability to save for retirement,” Vamos said.

Average superannuation balances have increased for both men and women according to the ABS data.

The average balances in 2013/2014 for all persons aged 15 and over were $98,535 for men and $54,916 for women. This is about a 20% increase from two years’ prior where average balances were $82,615 and $44,866 for men and women respectively.

Average superannuation balances at the time of retirement have also increased, to $292,500 for men and $138,150 for women in 2013/2014 from $197,000 and $105,000 respectively in 2011/2012.

Vamos said gender disparity in superannuation balances is now on the agenda, and the next step is for government, employers and individuals to take action.

“ASFA has proposed a number of options for improving the economic security of women in retirement, including raising and broadening the Superannuation Guarantee, retaining the Low Income Superannuation Contribution Scheme and amending annual contribution caps to enable people with broken working patterns to ‘catch up’ their superannuation contributions,” Vamos said.

For individuals in their early 30s, average balances rose to $36,400 for men and $25,550 for women in 2013/2014, almost two times the average balances of $20,000 for men and $14,000 for women two years earlier.

According to the ASFA Retirement Standard, a single person will need a minimum of $545,000 in superannuation at retirement to live a comfortable lifestyle. This is assuming that they will draw down all of their capital over the duration of retirement, and that they will receive a part Age Pension.

Australians reluctant to seek Professional Advice

Australians more reluctant to seek professional advice

A global survey shows that Australians are twice as likely to turn to family and friends for financial information as they are to seek advice from a professional.

The survey was conducted by global research firm GfK on behalf of the Financial Planning Standards Board (FPSB) and in conjunction with the Financial Planning Association (FPA).

It found that Australians rely less on planners and websites for financial information, compared to people in other countries.

A total of 70% of Australians did not know who to trust when it came to arranging their financial matters, compared to 66% globally.

While consumers are interested in financial planning services, 41% rely on friends and family, 30% rely on websites for financial information and 23% turn to a financial planner, compared to 31% globally.

When asked about the most helpful services that a financial planner can provide, Australians answered budgeting and debt management first (37%) and retirement planning second (35%).

Globally, retirement planning ranks highest at 50%, while investment planning ranks second, at 38%. Budgeting and debt management rank third at 36%.

Knowing who to trust is the biggest barrier with Australians willing to work with a financial planner. As many as 64% say that trustworthiness is a very important consideration, while 70% say they don’t know who to trust, compared to 66% globally.

FPA chief executive Mark Rantall said: “The survey reaffirms our own findings and validates our strategy of lifting education and professional standards of professional financial planners to help earn the trust of more Australians.”

Overall, 19,092 consumers who were either primary or shared household financial decision-makers participated in 19 territories around the world.