Suite 8 / 260 Auburn Road, Hawthorn 3122
Phone: 03 9214 4100
Fax: 03 9818 6008
enquiries@trumpetfinancial.com.au
 
 
eWombat Search
 
Hot Issues
Assess your retirement financial resources
Cryptocurrency audits tipped to increase this EOFY
Time to check your risk exposure?
Some general interest stats on SMSFs
Survey reveals strong opposition to retirement system changes
Check trust deed to protect super in estate planning
Australia by numbers – Update
Federal Budget 2018 – Overview
Your Budget
4 components of our 2018 Federal Budget
Tools to help you manage your financial position are available on our site.
New rules capture SMSFs trading big with cryptocurrency
Common EOFY slip-ups flagged for SMSFs
Beware residency rules if moving overseas
99 pct of SMSFs missing global opportunities
How to plan for a better retirement
Australia by numbers - Update
Determine your retirement goals
ATO issues update on cryptocurrency compliance traps
How likely is a global trade war?
Gig economy spike prompts calls for super policy changes
Australia's vital statistics
What your age should say about your super
Downsizing requires holistic tax planning
Millions of multiple super accounts erode savings
Why your retirement intentions are critical
Plans for study into elder abuse
Our website is really our digital office.
Articles archive
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Calls to Review ASIC's Definition of Lapse Insurance

Industry stakeholders are seeking clarity from ASIC over the criteria it is using to determine the incidence of life insurance policy lapses.



       


 


AFA’s GM Policy & Professionalism, Phil Anderson… the AFA is arguing for a more sensible outcome on the definition of a lapse…


Riskinfo understands the Association of Financial Advisers has sought discussions with ASIC on the definition of a lapse, which it appears is presently based on criteria including:


  • Policies lapsing due to non-payment of premiums
  • Policies/cover cancelled at the client’s request
  • Partial or total reductions in cover (e.g. reducing sum insured or reducing a monthly benefit)

Two key areas of concern for the AFA, advisers and advice businesses, centre around:


  1. The extent to which partial reductions in cover to reflect a change in the client’s circumstances should be included in the definition of a lapse
  2. The argument to exclude policy discontinuances where a mature age client cancels due to affordability issues or a change in personal circumstances

AFA GM Policy & Professionalism, Phil Anderson, confirmed to Riskinfo that in a supplementary submission to the PJC Inquiry into Life Insurance last month the Association called for ‘…a standardised definition of lapses that excludes reductions in cover and people who have reached an age where continuation often ceases as a result of affordability issues or a change in personal circumstances (i.e. 60 years of age).’


While the AFA has been arguing for what it refers to as ‘…a more sensible outcome’ on the definition of a lapse’, this topic also emerged at last week’s AFA National Adviser Conference. Speaking with Riskinfo, Robina Financial Solutions GM, Paul Forbes, strongly disagreed with the contention that partial or total reductions in cover should be included in ASIC’s lapse criteria:


“The first two [criteria] make sense,” said Forbes, “…but reductions in sum insured does not – especially with an aging demographic.” He continued, “Somehow ASIC has decided that an adviser who actively reviews their clients, retains their policy with a life company but reduces their cover, either because they can’t afford premium increases or because they have less need for insurance as their estate has grown and kids etc are off their hands, is a lapse.”


Forbes also noted he believes the removal of CPI cover linking on an insurance contract or moving the policy owner from stepped to level premiums could also be included in ASIC’s lapse data.


Riskinfo understands ASIC has recently obtained a comprehensive set of data from the life insurers for each adviser with a lapse rate of greater than 20% for the 2016/17 financial year using this lapse criteria.


By Peter Sobels
October 17, 2017
riskinfo.com.au




19th-November-2017
Trumpet Financial Pty Ltd ABN 11 443 516 384 Corporate Authorised Representative (No 327756) of Aon Hewitt Financial Advice Limited AFSL 239183 ABN 13 091 225 642
Registered Address: Level 33  201 Kent Street, Sydney NSW 2000 | Sitemap | Disclaimer | Privacy Policy | About Aon Hewitt Positioning