Replacement Business Policy (Risk) Learnings

Staff / Adviser completing this learnings record*

Q1: What is a potential risk for clients when replacing an existing insurance policy? (select one correct answer)*

The policy may include additional benefitsPremiums may decrease with ageClients may lose benefits from the original policyThe new policy may have fewer exclusions

Q2: What should financial advisers ensure when engaging in replacement business? (select one correct answer)*

The new product is more expensive than the old oneFull disclosure is provided at all stagesClients are not informed of risksReplacement business is prioritised over other activities

Q3: What is required for a replacement product to be recommended? (select one correct answer)*

It should only benefit the adviserIt must be in the client’s best interest and benefits/risks fully disclosedIt should have fewer exclusions than the previous productIt must guarantee a reduction in premium

Q4: Which of the following is a factor to compare when replacing a product? (select one correct answer)*

Benefit periodsUnderwriting termsPolicy ExclusionsAll of the above

Q5: How should conflicts of interest be managed according to the policy? (select one correct answer)*

Advisers should not disclose conflicts to clientsCommissions should always be maximisedConflicts should be avoided or managed in the best interest of the clientAdvisers should act in their own best interest

Q6: What should be highlighted when comparing original and replacement products? (select one correct answer)*

Only the benefits of the new productThe risks of switching providers or cancelling the original productThe number of advertisements seen by the clientThe performance of competing companies

Q7: What should be included in the written advice when recommending a replacement product? (select one correct answer)*

A list of promotional incentivesThe client’s tax historyAny risks associated with the replacement productThe client’s credit score

Q8: How often does MTG have to report to the FMA on replacement advice activity in the business? (select one correct answer)*

Every six monthsAnnuallyEvery five yearsEvery Quarter

Q9: What should be done if the replacement product involves a conflict of interest? (select one correct answer)*

The adviser should prioritize commissionsThe replacement should be made regardless of the conflictThe conflict should be disclosed and managed in the client’s best interestThe conflict should be ignored

Total Score

You cannot submit this learning until you have reached a pass mark (90 points).

Total CPD Points Achieved