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Forward Thinking Magazine : August 2011
42 As a recent independent research paper released by Rice Warner Actuaries indicates, "Sumo is a unique product in the Australian market. It offers levels of cover which have typically only been available after individual assessment and reinsurance placement by the insurer and for total permanent disablement (TPD), trauma and income protection insurance levels which would be declined by most companies." According to Rice Warner's research, Sumo's key benefits are threefold. It acknowledges Sumo offers "access to high levels of cover with relative ease, a streamlined application and underwriting process, and quick turnaround time between application and cover being instated." In its research, Rice Warner found that for large sums insured, Sumo offers a unique value proposition because the client avoids the lengthy and complex process commonly involved in obtaining significant levels of death cover through traditional products and cover is simply not available elsewhere at high sums insured for TPD, trauma and income protection. In terms of the cost of premiums, David Hare says "often advisers baulk at HNW clients because of the affordability of the premiums. But the premium isn't the focus -- it's about solving clients' needs." What type of clients does Sumo suit? The typical Sumo client will have an annual income of more than $1 million, and generally will need TPD cover of around $4 million or more and trauma cover of $2 million or more. Dr Sally Phillips, Macquarie Life's Head of Underwriting and Claims, explains: "Someone with Sumo needs more cover than standard life insurance products offer. They might be a professional with an annual income of $1 million or more, or someone who has high levels of personal or business debt. "Our clients include medical specialists, business executives and small business owners who are central to the ongoing viability of their business," she adds. A client in this category usually needs key person cover, buy/sell arrangements or to have business succession planning in place. This is particularly important as statistics show 11 per cent of businesses are forced into bankruptcy as a result of the ill health of a key person or there being no life insurance in place for executives in the business. Best-practice underwriting and in-house forensic accounting To deliver the right cover for HNW clients, Macquarie Life is leading the way by providing enhanced underwriting procedures and forensic accounting services that, when combined, allow advisers to complete comprehensive pre-assessments so that busy HNW clients know in advance the levels of cover they can apply for. To help make the underwriting process more efficient and clear, Macquarie Life has an in-house forensic and tax accounting specialist service that can be called on, if required, to help analyse the complex financial structures often employed by HNW clients, so that the right level of cover can be provided. This is a valuable resource to help advisers determine and justify the levels of cover that their clients need. Says Dr Phillips: "For HNW clients who need the right level of life insurance for the sake of their family and their business, there really is nothing on the market like Sumo. It offers high levels of cover and a fast application process that clients truly appreciate. For advisers, it's another innovative life insurance product from the comprehensive suite of insurance products Macquarie Life has developed to help them better meet the needs of their client base." ADDRESSING UNDERINSURANCE AMONG HNW CLIENTS