WE SEE AN
OPPORTUNITY
TO CONNECT
Income Protection
Adviser Education
& Marketing Kit
FEBRUARY 2013
We see an
opportunity
to Connect
Barely 20% of
Kiwis have Income
Protection
Recently the Financial Services Council1 reported that “while more than 95 percent of homes and cars are insured, only 57 percent of New Zealanders insure their lives and barely 20 percent have income protection insurance.” The same report characterised 60 percent of New Zealanders as finding personal insurance “all too hard”. Speaking about the report, the independent chair of the Financial Services Council Dame Jenny Shipley, said “market research indicates there is no hostility to the idea of personal risk insurance. In fact most people understand its value, but don’t know how much they need, or feel confident about purchasing it.”1
This highlights what many of you will come across everyday – many Kiwis out there need a helping hand to understand our industry’s complexities.
This presents a massive opportunity for you as a professional adviser to help demystify personal insurance and create a strong connection with them in the process. We’re here to help you meet the challenge head on and make the most of this opportunity.
IT'S ABOUT SUITABILITY. IT'S ABOUT YOUR SKILLED ADVICE
It’s well recognised in our industry that income protection is a complex area. The fact there are so many ways to earn a living and live one’s life, means a wide range of income protection benefits are available to match the wide variety for client needs and affordability.
Recommending income protection requires thorough assessment of a client’s needs in order to identify the most suitable benefits for your client.
The right income protection for your client is very much a factor of the predictability of their income, the type of job they do, and their specific financial commitments and goals. Your clients may rightly feel overwhelmed by the choices on offer. This is why providing advice on income protection presents an outstanding opportunity for you to showcase the value your skill offers clients in helping navigate the range of available choices, so they can find the best option to suit them.
HINT!
Integrating the SovTrack advice process into your sales process is well worth the time. Many advisers have told us that time invested with clients while using the process enables them to better understand their client needs, and they are also finding their recommendations are more readily accepted as the client has understood the reasoning – clients are able to see the facts and figures that lead to the recommendations.
The SovTrack advice process is available in Xplan for use by all SovNet advisers and Nominated Representatives in the Sovereign QFE. If you’d like more information on this please contact your Business Development Manager.
KEY FACTORS IN DETERMINING
SUITABILITY
> Income predictability > Income frequency > Income source
> Size of mortgage commitments versus other living expenses and debt > Risk tolerance > Occupation class > Savings
60% of
New Zealanders
find personal
insurance "too hard"
We see an
opportunity
to Connect
SOVEREIGN'S INCOME
PROTECTION RANGE
MADE TO CONNECT WITH ALL YOUR CLIENTS' NEEDS
Increasingly more people are becoming parents before considering marriage or setting up businesses and even start their retirement savings long before they buy their first home. Meanwhile, many of our incomes come from fluctuating sources – contracting, self employment and entrepreneurial start-ups. The traditional nine-to-five order of life can no longer be relied on as a model for mapping financial needs.
New Zealanders are great pioneers and are by no means afraid to do things differently. We’re confident taking on life’s great events the way we want to and in the order that suits us. The fact there are so many ways to earn a living and live one’s life, means we constantly strive to provide a range of well-constructed income protection options that have all New Zealanders’ needs in mind.
In light of this we’re excited to launch two new Disability Income Protection benefits – Mortgage and Income Protection and Loss of Earnings. These additions strengthen our range of ten cover options and are made to connect you with the full spectrum of New Zealanders’ income protection needs, from core to specialist.
The following pages provide an outline of the full Sovereign Income Protection range. More details are available in the ‘Why Sovereign: Disability Income Protection’ brochure and at sovereign.co.nz/productchanges. You should always refer to the policy wordings for full, up-to-date benefit details.
10 types of cover
to connect you with
the full spectrum
of Kiwis' needs
TOTALCAREMAX DISABILITY INCOME PROTECTION – BUSINESS
Start up Locum Cover Rural Continuity Business
Overheads Business Continuity Agreed value benefit Choice of both
TOTALCAREMAX DISABILITY INCOME PROTECTION – PERSONAL
NEW Mortgage and Income Protection Agreed Value Income Protection Essential Disability Income Protection Indemnity Income Protection NEW Loss of Earnings Agreed value benefit Indemnity benefit Best of both
SOVEREIGN'S INCOME
PROTECTION RANGE - PERSONAL
NEW: MORTGAGE AND INCOME PROTECTION
Simple protection that caters to a broad spectrum of New Zealanders particularly those starting out – big dreams, big plans, big reasons to protect their income.
Made to connect with people who want straight-forward income protection calculated on what’s likely to be the biggest component of their living costs – their rent or mortgage payments.
Key Benefits
> Certainty from an agreed value contract with cover to a maximum of $6,000 per month. > No ACC offsets.
> Clients can choose to insure up to:
> 110% of their mortgage repayments** or
> 40% of their gross income** – a great option for those renting. > Bed Confinement Benefit
> Optional Inflation Protection Benefit > Optional Redundancy Cover
** Calculated at application time
Taxation: Claim payments under this option are not taxable, and the premiums are not deductible.^
CONNECTING YOU WITH YOUR CLIENTS' CHANGING NEEDS
THE CHANGE Shifting attitudes and prohibitive costs to home ownership, mean more New Zealanders are taking on big responsibilities – marriage, parenthood, business ownership – long before they buy their first home.
THE CONSTANT Meanwhile, accommodation costs, be whether rent or mortgage payments, take up a significant portion of most Kiwis’ incomes. THE RESPONSE Sovereign’s Mortgage and Income Protection gives all
New Zealanders the opportunity to secure simple protection to help ensure they keep a roof over their heads, and their plans on track, should injury or sickness prevent them from earning. There’s also optional redundancy cover for those earning
a regular salary or wage.
And because we know, more often than not, accommodation costs rise over time we’ve included an inflation protection benefit.
Please note: Mortgage Instalment Insurance is now closed to new business but open to increases.
All features under the new Mortgage and Income Protection benefit will be passed back to all existing Mortgage Instalment Insurance policyholders.
Introducing two
new Disability
Income Protection
benefits
^ This is based on Sovereign’s understanding of New Zealand tax law in force at the date this document was prepared. As the Inland Revenue Department (IRD) is considering legislative change to clarify the tax treatment of income protection policies, Sovereign cannot and does not guarantee the correctness of its current understanding, nor does it accept any responsibility for any tax
NEW: LOSS OF EARNINGS
The best of both worlds – indemnity or agreed value; your client chooses the calculation that is most favourable at claim time.
Made to connect with high-earners particularly those on fluctuating incomes – contractors, the self employed or those starting or buying into a new business.
Key benefits
> The flexibility to choose the most favourable benefit calculation at claim time. Your clients don't have to gamble on which option at application time.
> In most situations, Loss of Earnings will pay more at claim time than other types of Disability Income Protection cover.
> Optional redundancy cover. > Premier Option upgrade available*.
Taxation: Claim payments under this option are taxable, and the premiums are deductible.^ Please note: Indemnity Extra cover is now closed to new business.
Loss of Earnings is a new benefit so does not pass back to existing policyholders. Existing clients who would prefer Loss of Earnings need to cancel their current cover and apply for a new policy that will be underwritten with the new benefit terms. Replacement business rules apply please refer to the Sovereign Underwriting Guide.
AGREED VALUE INCOME PROTECTION
Straight-forward cover providing certainty at claim time of what benefit payments will be. Made to connect with New Zealanders who want certainty today around how much their benefit payments will be, should they need to claim tomorrow.
Key benefits
> Agreed value benefit of up to 55% of your client's gross remuneration package at application time.
> Optional redundancy cover. > Premier Option upgrade available*.
Taxation: Claim payments under this option are not taxable, and the premiums are not deductible.^
ESSENTIAL DISABILITY INCOME
Lower-cost, simplified indemnity option.
Made to connect with Kiwis working in occupations that prevent them from purchasing regular Disability Income Protection and for those seeking a lower-cost option.
Key benefits
> Lower-cost option (but with fewer benefits).
> No financial evidence of income required at application. > Optional redundancy cover.
Taxation: Claim payments under this option are taxable, and the premiums are deductible.^
SOVEREIGN'S INCOME
INDEMNITY INCOME PROTECTION
Can provide a benefit of up to 75% of your client’s gross income package, less offsets. However, the payment will not exceed 75% of pre-disability income at the time of claim. Made to connect with New Zealanders who want income protection that calculates benefit payments based on their remuneration at the time they need to claim.
Key Benefits
> Claim benefit calculation based on pre-disability income not agreed at application. This can benefit clients whose remuneration packages have increased since the time cover was applied for.
> A common choice of cover for many salaried employees. > Premier Option upgrade available*.
Taxation: Claim payments under this option are taxable, and the premiums are deductible.^
*PREMIER OPTION
Upgrade option for Indemnity, Agreed Value and Loss of Earnings.
Made to connect with New Zealanders who want extra peace of mind from their cover. Key Benefits
Will provide extra funds in a variety of circumstances over and above Indemnity or Agreed Value Income Protection, or Loss of Earnings including:
> Bereavement Grant – a lump sum of three times the monthly benefit, should your client die while on a Total Disability claim.
> Bed Confinement Benefit – payment from day one of bed confinement rather than from the first 72 hours.
> Recurrent Disablement Benefit – no wait period should your client re-claim for the same or related condition within 12 months of the first claim being paid.
> Premier Total Disability Payment – sick leave is not offset.
> Premier Partial Disability Payment – to be eligible, your client simply has to be earning less than their pre-disability income (rather than less than 75%) and sick leave is not offset.
> 10% Consumer Price Index (CPI) cap is removed for claims.
> Extra cash benefit – an additional monthly benefit for three months after the wait period.
> Permanent disablement benefit – an additional monthly payment (equivalent to one third of monthly benefit).
> Home care benefit – a payment for home care services.
^ This is based on Sovereign’s understanding of New Zealand tax law in force at the date this document was prepared. As the Inland Revenue Department (IRD) is considering legislative change to clarify the tax treatment of income protection policies, Sovereign cannot and does not guarantee
OPTIONAL
BENEFIT
SOVEREIGN'S INCOME
START-UP INCOME PROTECTION
Easy and affordable protection for the newly self-employed.
Made to connect with New Zealanders striking out on their own in business and who might find it difficult to provide financial evidence of their last three years’ income.
Key Benefits
> Certainty from an agreed value contract with cover up to $9,000 per month (limitations apply).
> No financial evidence of income required at application.
> Recurrent Disablement – no waiting period should your client suffer a recurrence of the same disability within six months of a previous benefit payment ceasing.
> Simple upgrade option. > Waiver of Premium option.
Taxation: Claim payments under this option are taxable, and the premiums are deductible.^
LOCUM COVER
Covers the reasonable costs of engaging a suitably qualified person to run your client’s business if they are unable to work due to sickness or injury.
Made to connect with business owners where the impact of the principal being unable to work is significant.
Key Benefits
> Reimburses the cost of a locum replacement or, covers eligible business overheads if a locum is not engaged.
> No upper limit to cover – however only actual costs will be reimbursed, up to the selected cover limit.
Please note: A client cannot hold both Locum Cover and a Business Overheads policy. So, the first question to address is. Which benefit is more appropriate. The following factors will have a bearing on the type of cover that is most suitable; the nature of the business, geographical location, internal resources, existing arrangements.
Taxation: Claim payments under this option are taxable, and the premiums are deductible.^
RURAL CONTINUITY COVER
Protects farmers and sharemilkers from loss of income relating to illness or accident through the payment of a monthly benefit.
Made to connect with farmers and their partners who also work on the farm, as well as herd owning/leasing sharemilkers.
Key Benefits
> Up to 35% of your farm or share milking turnover, to a maximum of $10,000 per month. > Claims paid in advance.
> Optional ACC offsets.
> Optional Peak Season Benefit - pays an additional 25% for a three-month pre-nominated period.
> Optional add-on Business Income Support Benefit.
Taxation: Claim payments under this option are taxable, and the premiums are deductible.^
SOVEREIGN'S INCOME
BUSINESS OVERHEADS
Designed to pay the ongoing business expenses that continue to be incurred in the event of the owner being unable to work.
Made to connect with small business owners where the impact of the principal being unable to work is significant.
Key Benefits
Choice of Indemnity (the business must have been running for 12 months minimum), or Agreed Value (the business must have been running for 2 years minimum). Provides a payment to cover eligible business overheads while the business owner is ‘totally disabled’ including:
> Rent of business premises. > Interest on business loans.
> Gross salaries and related costs for employees who are unable to earn income for the relevant business while the owner is out of action.
> Bills – insurance premiums, electricity, water and gas, cleaning and maintenance. > Professional fees – accounting and audit fees, ongoing advertising expenses and
subscriptions.
> Equipment or motor vehicle leasing costs (of an expense nature), depreciation of business equipment, and other fixed expenses that are normal in the conduct of the business.
Please note: Overhead expenses do not include; salary, fees or other amounts paid or payable from the business to the life assured or any person engaged to replace the life assured or any member of the life assured's family (unless that person or member was employed in the business at least 30 days before the disability happened) repayment of mortgage or loan principal, cost or expenses of a capital nature, and cost of any trading goods or stock.
BUSINESS CONTINUITY
Can provide a monthly benefit payment to help keep your client’s business in action should they or their key employees be unable to earn an income for the business due to an accident or ill health.
Made to connect with business owners and shareholders who have been trading for more than three years and their key employees.
Key Benefits
> Monthly benefit of up to $50,000 with limited financial underwriting. > Claims paid in advance.
> Your client can choose agreed value or indemnity cover at the time they apply. > Business Mentors at claim time - provides two years’ access to Business Mentors
to help get your client's business back to full steam. > Optional no ACC offsets.
> Optional Employee Upgrade Benefit allowing your clients to provide their employees with access to Best Doctors® – a unique network of 50,000 of the world’s leading medical professionals – for a second opinion relating to critical diagnosis or treatment plans.
^ This is based on Sovereign’s understanding of New Zealand tax law in force at the date this document was prepared. As the Inland Revenue Department (IRD) is considering legislative change to clarify the tax treatment of income protection policies, Sovereign cannot and does not guarantee
Get in touch
with your clients
Sovereign’s range of income protection benefits are made to help your clients protect their lifestyle against sickness, injury or redundancy. Our new and enhanced benefits provide a natural reason to get in touch with your clients to:
> Tell them about the changes and benefits they can bring them
> Highlight the continued value of choosing Sovereign – the choice you helped them make > Provide the opportunity to review how their needs have changed since you last met. Nothing can beat your personal touch to turn these enhancements into a real opportunity for your business. And, there’s no better time than now to do it!
To help, we’ve updated our suite of income protection tools and have set them out below with ideas on how to incorporate them in your own campaign. Printed items can be ordered by completing and returning the Sovereign stationery form. Don’t forget that if you’d like further support, your Business Development Manager is just a phone call away.
TOOLS AND IDEAS TO PROMOTE INCOME PROTECTION
Know your product
Familiarise yourself with the Sovereign Income Protection range. Use this Marketing Kit, along with the Why Sovereign: Disability Income Protection brochure that's packed with key reasons to recommend.
Further resources can be found at sovereign.co.nz/productchanges
Prepare with
Identify and prepare your contact list Identify your target market. Consider clients who don’t currently have Income Protection and those with policies taken out some time ago – their circumstances may have changed. Extract data that fits your chosen ‘target’ from your database. Make sure all contact information is up to date before you mail. TIP: Xplan users can run a search to find out which clients have or don’t have Income Protection and if the policy was taken out before/after a certain date. Call the Practice Solutions Hub 0800 484 444 for further assistance.
Xplan
Practice Solutions Hub 0800 484 444
Prepare your direct mailing
The Income Protection DM flyers are designed to be an engaging, thought-provoking mail-out tools. Include either flyer when mailing to your selected list. There is also an Income Protection sample letter in Xplan.
Both can also be downloaded from sovereign.co.nz/productchanges
Direct mail with
SEIZE THE
OPPORTUNITY
XPLAN
3
1
2
TOOLS AND IDEAS TO PROMOTE INCOME PROTECTION
Mail out and follow up
Over the next week, follow up your mailing with a phone call to each recipient with the aim of booking an appointment.
You may wish to stagger the mailing over a number of weeks to avoid being overloaded with too many follow-up calls and appointments at one time.
Face to face with your client
Depending on your client’s particular needs, there are five client benefit sheets available to help talk your client through the most important features of income protection. Order a stock of each using the stationery order form found at www.sovereign.co.nz/productchanges.
Use with your client
4
Sovereign House
74 Taharoto Road, Takapuna, Auckland 0622
Private Bag Sovereign, Victoria Street West, Auckland 1142
Telephone: +64 9 487 9000 Fax +64 9 487 8003
