Product comparison, recommendation and suitability
This domain assesses whether you can compare policies on the terms that matter and justify a recommendation that is suitable for the particular client.
Comparison criteria
- Definitions and exclusions: own versus any occupation, trauma event lists, pre-existing condition wording.
- Structure: waiting periods, benefit periods, indexation, policy fees, premium pattern.
- Financial strength: insurer credit rating and claims-paying history.
- Service and claims experience: turnaround, assessors, dispute record.
- Underwriting terms: exclusions, loadings, and whether terms are standard or negotiated.
Suitability and documentation
The Code requires advice that is suitable for the client. The file should record the client's objectives, the options considered, why alternatives were rejected, and the commission or other conflict disclosed. A price comparison alone is not a suitability analysis.
Replacement business
Replacing an existing policy exposes the client to fresh underwriting, new exclusions, a new contestability period and loss of grandfathered terms. Compare the existing policy's definitions and premium before recommending a switch.
Worked example
Two quotes: $60 per month with an any-occupation definition and a 90-day wait, or $95 per month with own occupation and a 30-day wait. For a self-employed builder with limited savings, the second policy pays sooner under an easier test. The recommendation turns on definitions, not the $35 gap, and the reasoning is written into the file.
Traps
Recommending on headline premium; churning existing cover for commission; disclosing the commission but not explaining what it means; and comparing policies without checking the exclusions that would actually apply to this client.