FINANCIAL ADVISOR NEWS
Text Box: How Financial Advisors influence Underwriting and Claims Decisions We rely on your expertise to guide your client with the accurate recording of occupational duties and splits on the application form, which is one of the most important steps in the process of applying for income benefits. This split will determine the correct premium according to their risk profile and going forward will ensure a fair claims payout when in the claiming process. Often the split in duties of administration, supervisory, manual and travel is viewed as means of determining a premium which is affordable to the applicant but instead should be seen as a means of ensuring that your client’s financial needs are met at claims stage. Be cautious of manipulating occupational information to reduce premium. Rather find legitimate means of reducing the premium such as benefit reduction and increased waiting periods.* This situation can be better understood using the following example with different occupation splits: A self employed light motor vehicle mechanic has the following work duties: driving, full use of hands/fingers, good vision for detail, handling chemicals/greasy items, physical effort and reading and writing. Scenario 1 reflects the correct occupational split, while scenario 2 depicts the situation of adjusting the occupational split for a cheaper premium. As seen, the settlement in scenario 1 clearly demonstrates that the correct declaration of duties split will ensure that claim settlement is made according to the policy contract. Although scenario 1 will have higher premiums in comparison to scenario 2, the correct declaration of duties will ensure satisfaction of both parties when at claim stage. If you have any queries on occupation and duties splits, please email fmiunderwriting@fmi.co.za. Text Box: Did you know? In 2007, FMI paid 97% of all Temporary Income Protection claims.. Text Box: FMI Ltd is an Authorised Financial Services Provider FSP 2717

To find out more about FMI’s income protection products, please contact our Financial Advisor Distribution Team on 0860 10 52 08 or email us at sales@fmi.co.za.  To remove your name from our mailing list, please email unsubscribe@fmi.co.za Questions or comments regarding this newsletter?  Email us at marketing@fmi.co.za.

* A thorough Financial Needs Analysis should always be conducted with a client in accordance with FAIS.

Volume 19, July 2008

Scenario 1

Scenario 2

Temporary Income Protection benefit = R10 000 pm

Job Description:

Administration - 10%

Supervisory - 10%

Manual - 70%

Travel - 10%

Total - 100%

Job Description:

Administration - 20%

Supervisory - 20%

Manual - 50%

Travel - 10%

Total - 100%

A claim is lodged for a shoulder injury with surgery which has a time period of recovery according to the treating physician of:

1.) 6 weeks;

2.) Subsequently if the injury does not heal he will require an additional 4 weeks rehabilitation as partial disability renders him unable to perform his manual duties and driving

3.) A further extension of 8 weeks if the mechanic is unable to perform his manual duties.

Claim settlement – Scenario 1

100% for 6 weeks = R15,000-00

100% for 4 weeks = R10,000-00

100% for 8 weeks = R20,000-00

                     Total = R45,000-00

Claim settlement – Scenario 2

100% for 6 weeks = R15,000-00

60% for 4 weeks   = R6,000-00

60% for 8 weeks   = R12,000-00

                     Total = R33,000-00