NZ Level 5 Life, Disability and Health Insurance flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

FMCA 2013

The Financial Markets Conduct Act 2013 governs conduct for financial products and advice in New Zealand, including fair dealing, disclosure and licensing of financial advice providers.

Code of Professional Conduct

The Code sets ethical standards and minimum competence and client-care standards for financial advisers giving regulated advice to retail clients in New Zealand.

FMA role

The Financial Markets Authority is New Zealand's conduct regulator for financial advice and fair dealing, monitoring licensed financial advice providers and the Code.

RBNZ role

The Reserve Bank of New Zealand prudentially regulates insurers under the Insurance (Prudential Supervision) Act 2010, monitoring solvency, governance and risk management.

Dispute resolution scheme

Approved schemes such as FSCL and IFSO provide free, independent resolution of complaints against financial advice providers and insurers; membership is mandatory.

Term life insurance

Term life pays a lump sum on death or terminal illness within a fixed term, has no cash value, and is typically the cheapest way to cover a defined need period.

Whole-of-life cover

Whole-of-life insurance provides permanent cover to death or a specified age, may be participating with bonuses, and costs more than term for the same sum insured.

Trauma cover

Trauma or critical illness cover pays a lump sum on diagnosis of a defined condition such as cancer, heart attack or stroke, subject to survival periods and policy definitions.

TPD definition

Total and permanent disability cover pays a lump sum when the insured meets the policy's disability definition; 'any occupation' is stricter than 'own occupation'.

Stepped vs level premiums

Stepped premiums increase with age each year; level premiums are fixed and higher initially but may be cheaper over the long term.

Income protection benefit

Income protection replaces a percentage of pre-disability income, commonly up to 75%, while the insured cannot work due to illness or injury.

Waiting period

The waiting period is the time after disability begins before income protection benefits become payable, commonly 14, 30, 60 or 90 days.

Own occupation test

An own occupation definition pays benefits when the insured cannot perform their own specific job, and is broader than an any occupation test.

Agreed value cover

Agreed value income protection pays a pre-agreed sum insured regardless of actual income loss, unlike indemnity cover which pays a proportion of actual loss.

ACC interaction

ACC covers work-related injury; income protection typically tops up non-work illness or injury and may offset ACC payments under the policy wording.

Health insurance excess

The excess is the amount the policyholder pays towards a health claim before the insurer pays, applied per claim or per year as defined.

Pre-existing condition clause

A pre-existing condition clause excludes or restricts cover for conditions that existed before the policy started or within a defined look-back period.

Community rating

New Zealand health insurance is community-rated: premiums reflect age band and plan rather than individual health status, age or claims history.

Extras cover

Extras or ancillary health cover pays for non-hospital services such as dental, optical, physiotherapy and chiropractic, usually with annual limits.

Capital needs approach

The capital needs approach sums debts, future expenses and an emergency fund, then subtracts existing assets and cover to find the lump sum needed.

Income needs approach

The income needs approach replaces a percentage of income for a defined period, adjusted for inflation and existing income sources such as ACC or superannuation.

Human life value

The human life value approach estimates the present value of future earnings the family would lose, useful for high-income earners.

Suitability requirement

Advice must match the client's needs, goals, risk profile, affordability and existing cover, not simply the lowest premium product.

Statement of Advice

A Statement of Advice records the client's needs, the recommendation, why alternatives were rejected, costs, risks and any limitations.

Product replacement analysis

Replacement analysis compares lost benefits such as accrued bonuses, new waiting periods and re-underwriting against gains like lower premiums or better definitions.

Duty of disclosure

The applicant must disclose all material facts the insurer would consider relevant; failure can allow the insurer to avoid the policy or reduce a claim.

Underwriting outcomes

Underwriting may result in standard rates, premium loadings, exclusions or decline, based on medical, lifestyle, occupational and financial risk factors.

Cooling-off period

A cooling-off period, commonly 14 to 30 days, allows the policyholder to cancel for a refund provided no claim has been made.

Death claim evidence

A death claim typically requires a claim form, death certificate, proof of identity and policy documents, with payment to the beneficiary or estate.

Claim decline pathway

If a claim is declined, the client can complain internally and then to the external dispute resolution scheme such as FSCL or IFSO, free of charge.

Insurable interest

Insurable interest means the policyholder must benefit from the continued life or health of the insured, such as self, spouse or business partner.

Utmost good faith

Utmost good faith requires both insurer and policyholder to act honestly and disclose all material facts relevant to the insurance contract.