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The duty of disclosure is related to the principle of insurance which is the utmost good faith. There is the requirement for the insured, to be honest at all times and provide exact information to the insurance company. Failure for the client to disclose all the information regarding his smoking habits may lead to:

The insurer may end up terminating the client’s policy or the insurer can decline to compensate the claim that the client may raise. The client may also ``not be paid any claim in full by the insurance company. The client’s cover may be affected due to the failure of disclosing all or necessary information. All the insurers in most cases always recommend one to keep the records including all the letters and the information that is required (Ge, 2017). This duty usually applies in most cases which arises before placing the policy.

Question 2.

a. The name of the insurance company is ANZ Life Insurance and was started on 21st May 2016.

b. The clients can apply for the policy conditions under the policies, they must follow all the rules indicated and their obligations (Kahn & Kay, 2017).

c. Sicknesses which are covered by the policies are cancer, kidney failure, and heart attack.

d. Sicknesses that are not covered are the other common sicknesses such as malaria and typhoid.

Question 3.


The premiums are paid with the available pre-tax dollars and therefore they are very cheap.

There is a spontaneous acceptance which is put up to certain restricted amounts which do not require any history medical check.


One is not able to get all the benefits until the retirement time comes. The payments are then taken into consideration as those of superannuation.

The benefits of death are also taxed on the dependence on whom is to be paid the benefit.

There is a very significant valuation of the TPD benefits taxation. To be precise it is mainly for the young people.

Question 4.

Factors which affects the insurance premiums

Cost of policy cover usually affects the insurance premiums. They depend on the value of premiums charged and also the coverage that is given. The costs may be also affected by the value of the premiums where the rates depend on the premiums value.

Proposals where in most cases require that all the plans must cover some services that limit the value of sharing the cost. This is also equivalent to a plan that exists in many cases. The premium would be high in a situation where there is a more insurance coverage.


First its age, where the premiums can be high for the adult than the youths,

Secondly, location, where one lives has a very big effect on the premiums (Bhutta & Ringo, 2017).

Thirdly habitats, the use of tobacco where the insurers may end up charging the tobacco users to over 50% which affects the premiums.

Finally, occupation, the premiums either go up depending on the type of occupation. Some occupations are risky hence requiring high premiums.

Question 5.

a. The monthly benefit that is appropriate for Michael is $50000 since it is affordable and he can raise the amount.

b. The benefit period appropriate for Michael is the period of premium payments.

c. The waiting period which is appropriate is the end period of premium payments.

d. I would recommend indemnity since it would reinstate Michael back to the position he was in.

Question 6.


Advantages of Stepped Premiums

The stepped premiums are usually cheaper at the policy start which is made affordable so as to hold the insurance in the short run.

It also covers people who seek in keeping the cover for a short run especially where they may have some restrictions on the cash flow. This is mainly for the cost saving method (Bhutta & Ringo, 2017.


There is a rise in cost as one approach old age. Therefore one is unable to keep the same cover level.

It only gives the best to the people who have the will to keep the short-term cover and also the ones with restrictions in cash flows. Therefore they end up looking for the saving cost.



The level premiums usually provide a very fixed cost of premium which will end up remaining at a constant level until attaining the age bracket of 65. There is an exemption for the increments which are related to inflation.

The insured is also aware of the number of premiums, therefore will end up avoiding some other policy increment.


The insured pay more at the start of the policy, where else there should be an average in the prices of premiums.

They are only suitable for people who can only keep a long-term policy.

I would recommend stepped premiums to a particular client since they usually appear to be much better and cheaper.

Question 7.

a. The professional indemnity insurance is termed as the situation where the insured is reinstated back to the position that he or she was before the loss happened (Kahn & Kay, 2017).

b. Reasons, why the general insurance is not handled by the financial planner, includes:

The compensation process can be very confusing since the various types of the financial professionals is not very transparent to all the clients.

The strategies of investments mostly vary at a very big deal since most of the investors take very huge risks for their rewards.


Kahn, J. A., & Kay, B. S. (2017). Mortgage Market Distortions from Mispricing during the Boom: Evidence from Insurance Premiums.

Bhutta, N., & Ringo, D. (2017). The Effect of Interest Rates on Home Buying: Evidence from a Discontinuity in Mortgage Insurance Premiums.

Ge, S. (2017). How Do Financial Constraints Affect Product Pricing? Evidence from Weather and Life Insurance Premiums.

August 18, 2023

Business Life



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Insurance Company

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