When the client has nominated they are more concerned about under insurance:
The following methodology will be applied by PrimeSolve to generate needs recommendations:
1: Life – Human capital method will be applied;
2: TPD – Human capital method + upfront medical costs in the event of total and permanent disablement. High care is assumed.
3: Income protection
a) Client is working – The default amount is 75% of gross salary + 10% superannuation contributions.
b) Client is at home – Assume income protection (home duties policy). The default for sum insured is based on:
i) Does the client/s have children? If a client has children pre-school age, it is assumed that a nanny would be required full time.
If a client has live in children who are at school, it is assumed a part time nanny would be required.
The cost of a nanny is assumed to be:
Full time – $70,000
Part time – $40,000
ii) An additional cleaning allowance of $150 per week is also assumed.
4: Trauma
a) If client is working then it is assumed that Trauma is provided to cover the 25% gap not covered by Income protection.
b) Cover lump sum for trauma events with the highest probability of occurring. These are:
| Trauma event | Cover |
|---|---|
| Benign brain tumor | $20,000 |
| Cancer | $120,000 |
| Heart attack | $20,000 |
| Kidney failure | $20,000 |
| Stroke | $150,000 |
| Total | $330,000 |
5: Business expenses
If business expenses is in scope, the sum insured is based of the expense figure for each company. This is found on the Fact Find under “Other Entities”.
6: Business succession insurance (Life & TPD)
If business succession is in scope, Life & TPD needs for the business are calculated based on the buyout value of each shareholder. To calculate the buyout amount we multiply the following for each key person:
“Percentage shareholding x Value of business”.
The percentage shareholder is found within the Fact Find at the following section:
The value of the company is based on the following estimate:
7: Key person insurance
The maximum income protection policy is assumed (75% + 10% superannuation) for each key person within the business. A client must enter a key person within the Fact Find under the company section for recommendations to be generated.
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