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RM case study Q1 resubmission

Discussion in 'Financial Planning Study Group' started by combaksa, 7th Dec, 2010.

  1. combaksa

    combaksa New Member

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    Hi all,
    I've just received an email with feedback that my assignment needs to be resubmitted for casestudy Q1.

    Feedback is that Simone husband also needs to be insured. I can understand that maybe I need to recommend Life, TPD and trauma, but how can you recommend Income protection if the husband is not working or do I disregard that or assume he is working or going to be working?

    Thank you in advance.
     
  2. serge g

    serge g Active Member

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    You can't - if there's no income to protect you can't get coverage (and don't need it at this point because they're obviously getting by on the income they already have, unless you're told otherwise, that they're already cashflow negative).

    Even if he's not currently working you should get life coverage now for the loss of his potential future earnings assuming he's going to start earning at some stage, and you expect him to ultimately make a meaningful contribution yours and your children's future living standards. If he drops dead at 30 (and it does happen), your client might miss the million or two that he could earn over the term of his working life.
     
  3. combaksa

    combaksa New Member

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    Thank you for your reply serge g.

    This is the question asked:
    As Simone’s adviser, outline the recommendations you would make to her regarding life insurance and general insurance needs. Provide a brief explanation of each insurance you recommend, the amount of cover and your reasons for these recommendations. For income protection you must provide waiting and benefit periods and your reasons for recommending those particular periods.

    On my first submission, I recommended all the appropriate insurance(just for Simone, because I thought I need to recommend for her only), but the marker's feedback is that the husband(not working) has to be insured too.
    So I guess Life insurance, TPD and trauma for the husband is the one I missed to get a pass on first submission.
     
  4. serge g

    serge g Active Member

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    I imagine that had something to do with itt, they don't normally turn on a single issue though, there must have been something else.

    The thing is, the question has put it as though it were a client situation. Imagine she walks in off the street, tells you her family situation and asks you for advice on what insurances she needs. Would you ignore the possibility that her hudband's sudden death might have a deleterious effect on her lifestyle just because he didn't happen to be in the room? Of course not - you'd look at all risks that might have a negative impact on her, and you'd take account of their future situation.

    If she was a financial dependant of some other person (not a husband - an uncle or some other benefactor), you might want to insure that person's life for her benefit in the same way. It's a fairly crucial point - sounds like they were right to pull you up on it.
     
  5. Jess4fun

    Jess4fun Member

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    That's so funny. That is exactly what they said to me. but in another case on here, when they submitted the assignment which I had a look at it mentioned nothing about the husband and they passed. Must be different markers. Butit does make sense. What subject are you completeing next? I still have to do my exam for Risk