The standards expected for this Module is first year University/Tertiary education level or as stated in the table below.

Transcription

1 Module 2 Risk Management and Insurance Planning Standards The standards expected for this Module is first year University/Tertiary education level or as stated in the table below. Expectations Students are to be advised to read outside of the study guide as examinable questions would be drawn from these recommended readings. The list of recommended reading applicable for this module can be found at the end of this appendix. Syllabus Topic Title Remarks 1 Fundamental concepts in risk management Differences in human attitudes toward risk Various methods of classifying risks Risk management methods Insurance as a risk management technique 2 Insurance fundamentals Concept of insurable risk Mortality/morbidity Pricing fundamentals Insurance company crediting methods New premium Investment income using premiums Identification of life, health, household, motor and other risk exposures Analysis of present coverage Loss of income to family Final expenses 3 Legal principles of insurance Continued reception of English Law Section 5(1) Civil Law Act 2 nd Charter of Justice 1864 Law of contract in general Offer and acceptance Consideration Intention to create legal relation Legal capacity Law of tort Negligence Elements of a negligent act Legal aspects of insurance contracts Basic components of an insurance contract

2 The law of agency applied to insurance Principle of utmost good faith Duty of disclosure Effects of non-disclosure and misrepresentation Trusts Statutory / s73 CLPA and non-statutory trusts Legal effect of a Will vs nomination of beneficiaries in a life insurance policy Trust policies vs non-trust policies Assignment of policies Effects of trust policies on estate duty Income tax act Income taxation on life insurance Treatment of insurance premium in relation to personal income tax General concept of taxation on keyman insurance, employee benefits, cafetaria plans, partnership insurance Estate duty Liability of estate duty at death Moveable and immoveable properties deemed to pass Exemptions Life insurance as a tool for estate duty planning 4 The role of Insurance in financial planning Protecting a client s asset value in the face of inflation Insurance as a mechanism for risk transfer 5 focal points of a financial planner How financially independent and risk averse a client is How much capital is needed to produce income to support the family in the event of a client s death or disability How much capital is required to retire debts How much capital is required for emergency liquidity reserves How much capital would be provided form other sources 5 Factors affecting insurance needs Factors affecting health and life insurance needs Death Disability Critical illness/dread disease

3 Educational funding Estate duty Debt retirement Analysis of life insurance needs Human life value approach Life insurance needs approach Capital needs approach Key-man insurance Partnership insurance Employee benefit Cafetaria plan 6 General insurance policy analysis Buying general insurance for financial planning Classes of general insurance Household insurance Motor insurance Liability insurance Property insurance Workman Compensation 7 Life insurance policy analysis Types of life insurance Term Disability Critical illness/dread disease Whole life Endowment Single premium Investment linked Section 73 CLPA policies and its implications Relevant products for SRS and retirement planning 8 Comparing life insurance products Life insurance policy selection Term vs whole life Traditional plans vs investment linked Methods of analyzing life insurance policy illustrations Statutory requirements for life insurance policy illustration Concept of bonuses Reversionary bonus Performance bonus Terminal bonus Maturity bonus Cash bonus Policy discontinuation Surrenders & Policy Loans Paid up Benefits & Risk of each type of policy

4 Non-forfeiture options Bankruptcy Reinstatement of discontinued policies Miscellaneous Lost or destroyed policies Suicide clause Children s policies and vesting age Insurability and non-contestability Policy replacement pros and cons Buying term and investing the difference the pros and cons 9 Annuities What are annuities? How do annuities work? Types of annuities Variations of annuities policies Tax consideration of annuities Structured settlements Annuity policies using CPF funds 10 Health Insurance Overview of Healthcare Environment in Medical Expense Insurance Disability Income Insurance Long Term Care Insurance Dread Disease Insurance Hospital Cash (Income) Insurance Managed Healthcare Healthcare Financing using CPF and Private Medical Insurance Schemes Health Insurance Pricing and Underwriting Needs Based Analysis and Coordination of Benefits in Health Insurance Employee Benefit 11 Evaluating life insurance companies MAS 102 margins of solvency MAS 104 valuation of assets and determination of liabilities MAS 200/300 statutory returns MAS 307 regulatory framework for investment linked life insurance products Selecting a financially sound insurance company 12 Law & regulations for distribution & marketing of insurance policies MAS 306 minimum standards for agents and agency system

5 LIA guidelines including implementation of 2001 CEDLI recommendations Financial Advisers Act Financial Advisers Regulations General Insurance Association Code of Practice General insurance ombudsman committee Reference Materials Title Author Publisher Applicable Modules Use Fundamentals of Emmet J Vaughn John Wiley & Sons Inc Module 1 Risk and Insurance Therese Vaughn Module 2 8 th Edition Law of Insurance Poh Chu Chai Longman Module 2 Publishers Pte Ltd Personal Financial College College of Module 2 Needs Analysis of Insurance Insurance Health Insurance College College of Module 2 of Insurance Insurance Financial Advisers Monetary Authority Monetary Authority of All modules Act Financial Advisers Regulations of Monetary Authority of Monetary Authority of All modules for