INSURANCE By Steve Wright
COVER REPLACEMENT
Assessing exclusions and premium loadings is a vital part of any insurance adviser’s job writes Steve Wright .
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ou recommend replacing a client’s existing policy with one with better features and benefits but the underwriting comes up with an exclusion or a premium loading, does this mean moving the client is wrong…? Not necessarily… this is where good advisers really become worth their salt! An underwriting exclusion should be compared with the exclusions the client currently has, which are there even if initial cover was issued with no special terms!
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What do I mean? Usually existing cover has many built-in exclusions. Exclusions can be specifically detailed – under the exclusions clauses; or simply exist due to the lack of a benefit that will be covered under the proposed new policy. Let’s consider some examples… ➤ Your client’s new trauma cover application comes back with an exclusion under the TPD benefit for a dodgy knee. The new trauma cover includes built-in ‘own occupation’ TPD. If the clients’ existing trauma cover does not
include ‘own occupation’ TPD as a covered condition, the new exclusion means nothing – no claim for disability caused by knee issues would have been covered under the existing policy! ➤ Your client’s Partners Life trauma cover application comes back with an exclusion under TPD benefit for the dodgy knee. However, the client’s existing cover has TPD. Is this the end of it? Probably not, it depends on the likelihood that the dodgy knee (which might already be covered by ACC)
