Protection Plans. Enhancements Guide 19 May For Adviser use only

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1 Protection Plans Enhancements Guide 19 May 2014 For Adviser use only

2 Protection Plans Enhancements We are committed to continually delivering market-leading solutions and product features for you and your clients. Below is a summary of the enhancements for BT Protection Plans, effective from 19 May Introduction of Key Person Income In an Australian first, we are introducing Key Person Income, a unique insurance solution for small business. For any business, continual success is largely dependent on having the right people in place, to manage the business and to drive revenue. Key Person Income cover can help businesses protect against the negative financial impact which would arise if a business owner or key income-generating staff member is sick or injured. If the insured key person is unable to work to their full capacity due to sickness or injury, Key Person Income cover will provide a monthly benefit to the business for up to one year. With the addition of Key Person Income, BT Protection Plans now offer a comprehensive range of business insurance solutions to provide financial support to your clients business in the event of disability or death. For more information about Key Person Income, please refer to the Key Person Income flyer and the BT Protection Plans Product Disclosure Document dated 19 May 2014 (PDS). Product enhancements Our Income Protection and Living Insurance enhancements offer more flexibility and support for your clients when they need it. For more information about the following benefits and definitions, please refer to the PDS. Income Protection Improvement to waiting periods more flexibility We re giving your clients more flexibility during the waiting period. Your clients can return to work for up to five days during their waiting period at full capacity, if the waiting period is 30 days (or up to 10 days if the waiting period is 90 days or more). In these circumstances, we will not extend their waiting period by the days worked, so your clients can keep in touch with their workplace and attempt to return to work if they have the ability to do so. This is only available for income protection policies with the own occupation IP definition. Introducing our new advanced partial payment providing financial support sooner An unexpected sickness or injury can have an immediate financial impact on your clients and their families with expensive upfront medical costs and everyday living expenses in the absence of income. It is crucial we provide financial support to your clients as soon as we can. That s why we have introduced a new advanced partial payment for total disability claims. If your client is eligible to receive a Total Disability Benefit, we will provide an advanced partial payment (equivalent to a fortnight s pro rata monthly benefit) just two weeks after the end of the waiting period. Your clients will be able to receive financial help earlier, at a time when they need it the most

3 Introducing our new Child Care Benefit 1 supporting families A period of disability doesn t just impact the insured person s ability to earn their income. Sickness and injury can also have a significant impact on a person s ability to take care of their family. This is where our new Child Care Benefit can help. If an insured person is totally disabled and as a result of this, incurs additional child care costs, we will help by reimbursing their child care costs for eligible children, for a maximum of six months over the life of the policy. The amount we will reimburse per month is the lesser of: 5% of the Total Disability Benefit; ` ` $500 per month; and the actual additional child care cost, less amounts reimbursed from other sources. Living Insurance Improving coverage for angioplasty triple vessel We have improved our definition for Angioplasty triple vessel to keep up to date with medical practice. If the insured person undergoes a triple vessel angioplasty in a single procedure or in two procedures no more than two months apart, they will be eligible to claim a full Living Benefit payment under the Angioplasty triple vessel definition. 3 Update to severe burns definition 4 Our severe burns definition has been updated to include coverage for third degree burns to the feet. Improvements to the Future Insurability Benefit 2 We have improved the Future Insurability Benefit so your clients can utilise this benefit more frequently. Your clients can now increase their monthly benefit in line with increases in their income every 12 months at their policy anniversary date, up to a maximum of 15% each year. Increases under the Future Insurability Benefit is available for clients who were under age 55 at the last policy anniversary date. Additional eligibility criteria and restrictions apply so please refer to the PDS for more details. 1. Child Care Benefit is only available under an Income Protection Plus policy with the own occupation IP definition. 2. Future Insurability Benefit is only available under Income Protection, Income Protection as Superannuation and Income Protection Plus policies with the own occupation IP definition. 3. Definition for Angioplasty triple vessel: Undergoing for the first time either angioplasty, cardiac keyhole surgery or stent insertion on 3 or more coronary arteries within a single procedure, or in two procedures no more than two months apart, as considered necessary by a cardiologist to treat coronary artery disease. Angiographic evidence is required to confirm the need for this procedure. 4. Definition for severe burns: Tissue injury caused by thermal, electrical or chemical agents causing third degree burns to: a. at least 20% of the body surface area as measured by the rule of 9 or the Lund & Browder Body Surface Chart (or equivalent classification); or b. at least 50% of both hands, requiring surgical debridement and/or grafting; or c. at least 50% of both feet, requiring surgical debridement and/or grafting; or d. the face, requiring surgical debridement and/or grafting. bt.com.au 3

4 Stronger Super From 1 July 2014, a new operating standard comes into force which prohibits trustees of superannuation funds from purchasing insurance policies with definitions that are inconsistent with superannuation conditions of release. This means policies established through superannuation on or after 1 July 2014 can only provide coverage which is consistent with one of the following conditions of release: Death (SIS Regulations Schedule 1, item 102) Terminal medical condition (item 102A) Permanent incapacity (item 103) Temporary incapacity (item 109). In response to these legislative reforms, we have amended our benefits and definitions to better align BT Protections Plans with the Stronger Super requirements. Below is a summary of the changes to Protection Plans policies owned inside superannuation, and the solutions available for your clients. It is important to note that these changes will apply to new Protection Plans policies issued under the PDS dated 19 May There are no changes to the definitions for existing clients who currently hold these benefits. Income Protection We will continue to offer endorsed agreed value, agreed value and indemnity contracts for policies held inside superannuation. What s changed? At the time of claim, the maximum monthly benefit that we will pay for policies owned inside superannuation will be limited to the insured person s highest average monthly earnings in any consecutive 12 months in the three years prior to disability (combined with any income the insured person is receiving from other sources). This condition will not affect the benefit amount payable on indemnity policies, but may affect the amount we can pay on endorsed agreed value and agreed value policies. Solution Policies owned wholly inside superannuation will be restricted by this new definition. Your clients can link their endorsed agreed value and agreed value Income Protection Plus benefits inside and outside superannuation with Income Linking Plus. If Income Linking Plus is selected, any benefit that your client is eligible to claim which exceed the above definition, or which would not meet a condition of release, can be paid through their linked policy outside superannuation. This may include a portion of their Total Disability Benefit or Partial Disability Benefit, and support benefits such as Crisis Benefit and Specified Injury Benefit

5 Example of Income Linking Plus Monthly premium $214.77* Premium funded through superannuation $184.70* Premium paid outside superannuation $30.07* John John applies for an agreed value Income Protection Plus policy with a monthly benefit of $12,000 (based on his monthly income of $16,000). With Income Linking Plus, John is able to fund over 85% of his premium through superannuation. Five years later, John suffers a serious injury and has to cease work immediately. A Total Disability Benefit of $12,000 is payable. 1 Total Disability Benefit $12,000 Benefit paid inside superannuation $10,000 Benefit paid outside superannuation $2,000 In the three years prior to his disability, John s highest average income in a 12 month period is $10,000, and after his disability, John receives no income. With Income Linking Plus, $10,000 can be paid to John through his superannuation fund, and the remainder of the Total Disability Benefit can be paid through the linked policy outside superannuation. * Based on the stepped monthly premium for a 40 year old male accountant, non-smoker, living in NSW, with 30 days waiting period and benefit period to age 65. Includes Policy Fee and Stamp Duty. 1. John has chosen not to have any CPI increase on his policy. bt.com.au 5

6 Stronger Super Continued TPD What s changed? Own occupation TPD is no longer available inside superannuation TPD definitions redefined. Own occupation TPD is no longer available Under the Stronger Super superannuation reforms, we can no longer offer own occupation TPD for superannuation-owned policies. Solution Your clients can continue to use Flexible Linking Plus to link their own occupation TPD cover across two policies, inside and outside superannuation. The TPD premium can be funded partly through superannuation, with the remainder paid for outside superannuation. For more details on Flexible Linking Plus, please see the PDS. TPD definitions redefined We have aligned our other TPD definitions for benefits offered inside superannuation to the superannuation condition of release for permanent incapacity. A summary of the changes is shown below. Please refer to the PDS for the definitions of total and permanent disability. TPD DEFINITION Any occupation TPD General cover TPD Home duties TPD WHAT S CHANGED FOR BENEFITS OFFERED INSIDE SUPERANNUATION? Removal of the 25% total remuneration tier Addition of an any occupation criteria (based on the insured person s education, training or experience) Addition of an any occupation criteria (based on the insured person s education, training or experience) Terminal illness We have aligned our terminal illness definition for benefits offered inside superannuation in line with the superannuation condition of release for terminal medical conditions. A summary of the change is shown below. Please refer to the PDS for the definition of terminal illness. DEFINITION Terminal Illness WHAT S CHANGED FOR BENEFITS OFFERED INSIDE SUPERANNUATION? Requirement for certification by two registered medical practitioners that the insured person has a sickness or injury that is likely to result in death within 12 months from the date of the certification, at least one of the practitioners is the treating registered specialist medical practitioner, and for each of the certificates, the 12 month period (from the date of certification) has not ended. Certain benefits are no longer available inside superannuation The following benefits are no longer available to be held inside superannuation. Living Benefit Children s Benefit Needlestick Benefit Business Overheads. Our solution With Flexible Linking Plus, your clients can continue to link their Living Benefit, Children s Benefit and/ or Needlestick Benefit to a policy held inside superannuation

7 Other Important Information Insurance Contracts Act and Privacy Act In response to changes to the Insurance Contracts Act and Privacy Act, we have updated the duty of disclosure and privacy information in our PDS, Application Forms and Personal Statement. System Changes Important Dates WHAT YOU NEED TO KNOW 19 May 2014 New version of LifeCENTRAL+ is available. New marketing collateral available for download from LifeCENTRAL. 19 May to 30 June 2014 If you have completed an application before 17 May 2014, but have not submitted it, some underwriting questions may now be out of date. You will be prompted to complete these additional questions before you can submit the application. You can continue to submit paper applications signed prior to 19 May 2014, for policies under the previous PDS until 30 June June 2014 Last date for policies under previous PDS (ie PDS dated 20 May 2013) to be issued. bt.com.au 7

8 For more information to your Business Development Manager Monday to Friday 8.00am 6.30pm (Sydney time) and speak to your dedicated life insurance consultant lifecentral.com.au For more information This information is current at 19 May 2014 but is subject to change. The Insurer of BT Protection Plans is Westpac Life Insurance Services Limited ABN , AFSL Number ( the Insurer ). BT Protection Plans is issued by the Insurer except for Term Life as Superannuation and Income Protection as Superannuation which are issued by Westpac Securities Administration Limited ABN , AFSL Number ( WSAL ) as trustee of the Westpac MasterTrust ABN The Insurer and WSAL are wholly owned subsidiaries of Westpac Banking Corporation ABN , AFSL ( the Bank ). Neither the Bank nor any member of the Westpac Group (other than the Insurer) guarantees the benefits payable in relation to BT Protection Plans. This information has been prepared by the Insurer and is for use by advisers only. It is not to be copied, used, reproduced or otherwise distributed, circulated or communicated to any retail client or any other party, or attributed to any member of the Westpac Group. The information provided is a brief overview only, is general in nature and does not take into account any personal circumstances. Neither the Insurer nor WSAL intend that this publication be used as the primary source of the readers information but as an adjunct to their own resources and training. As individual circumstances will differ, independent tax advice may be required by your client. For terms and conditions relating to BT Protection Plans, including limits and exclusions, please refer to the appropriate Product Disclosure Statement, available at our website bt.com.au. BT lc