UNDERWRITING GUIDE March 2019 - Sovereign Illustrations

 
UNDERWRITING GUIDE March 2019 - Sovereign Illustrations
ADVISER REFERENCE GUIDE

UNDERWRITING
GUIDE
March 2019
UNDERWRITING GUIDE March 2019 - Sovereign Illustrations
CONTENT
          Welcome3
          Underwriting Process                                                                   4
          Reminder - what your client needs to tell Sovereign                                    6
          Non-medical underwriting limits                                                        8
          Financial underwriting                                                             10
          Insuring Non-Income Earners                                                         18
          HealthScreen® 								19
          Tele-underwriting                                                                  20
          Residency21
          Fast Forward                                                                      25
          Business Safeguard Facility						26
          Buyback Benefit							28
          Occupation Classifications						31
          Hazardous Pursuits                                                                 32
          Benefit Alterations                                                                33
          Reinstatement rules							38
          Frequently Asked Questions						39

                                                                 Sovereign Underwriting Guide |   2
WELCOME                                                                                             Back to Contents

Helping give        This guide is designed to give you confidence in setting expectations about the
                    underwriting needs of, and the process for your clients.
you guidance in     The purpose of this guide is to make it easier for you to complete risk applications and,
knowing Sovereign   more importantly, to have your business completed quickly.
                    As the information regarding underwriting is for reference only, your Sovereign
                    underwriter may request additional information as necessary.

                    UNDERWRITING PHILOSOPHY
                    We adopt a holistic evidence based approach to Underwriting, treating each applicant on
                    an individual basis taking into account their unique medical, occupational, financial and
                    avocational circumstances and applying a premium which is fair, equitable to the risk and
                    sustainable throughout the life of the policy.
                    We take a common sense business approach within the framework of our risk assessment
                    parameters and look for innovative solutions and alternatives to ensure that we are
                    transparent, flexible and competitive but balance the need to maintain a sustainable
                    book of business and deliver on our claims promise.
                    We put our customers first and partner and collaborate with and keep them fully
                    informed during the underwriting process, providing logical explanations for all decisions
                    to ensure the best possible service and outcomes.

                    UNDERWRITING OPERATING PHILOSOPHY AND PRINCIPLES

                       DOING THE                We will provide a consistent and efficient level of service.
                      RIGHT THING
                                                We will make fair and commercially balanced decisions.
                                                We will deliver on our promises

                         IN THE                 We take a common sense approach and focus on adding
                       RIGHT WAY                value for our customers.
                                                We partner and communicate with our customers and make
                                                it easy for them to do business with us.
                                                We will honour our Underwriting Philosophy.

                        WITH THE                We are open, approachable and flexible.
                      RIGHT PEOPLE
                                                We focus on continuous improvement and innovation.
                                                We are committed, take accountability and ownership.
                                                We have the right attitude and conduct our business in a
                                                professional manner.

                    CONTACT US
                    You can contact our underwriting team via our Adviser Relationship Team
                    on 0800 768 287.
                    For a claim form or information about how to make a claim, please go to:
                    www.sovereign.co.nz or
                    For claims assistance or to notify us of a claim, please call Sovereign on 0800 500 195.

                                                                                     Sovereign Underwriting Guide |   3
UNDERWRITING PROCESS                                                                          Back to Contents

               LEGAL DISCLAIMER
               The availability of insurance cover is subject to your client’s application being approved.
               All applications are subject to individual consideration. Special conditions, exclusions
               and premium loadings may apply. This insurance is underwritten by Sovereign Assurance
               Company Limited (‘Sovereign’). For full details of the products and benefits offered by
               Sovereign, please refer to the policy document(s) which are available from Sovereign.
               The information in this publication is to change without notice however any
               changes will endeavoured to be communicated via our Hotline communications.
               While every effort has been made to ensure the information contained in this publication
               is correct, Sovereign does not guarantee the information.
               The information contained in this publication is general in nature and is not intended
               as advice. It may not be relevant to individual circumstances.

                                                                               Sovereign Underwriting Guide |   4
UNDERWRITING PROCESS                                                                                  Back to Contents

Our aim is to make   Our aim is to make the process of applying for cover as easy and simple as possible.

the process as       As an adviser you have access to a wealth of information regarding your client, including
                     the basis on which an application is made.
simple as possible   When you share information on your client with us we are better able to understand the
                     risk we are assessing and apply the best and most appropriate solution for your client.
                     The more we know about your client and the reasons behind the cover being applied for
                     at application stage the easier and faster the underwriting process.
                     If you have any additional information, including financial include these with your
                     application which could reduce the number of requirements called for.
                     Please ensure you have informed your client of their duty of disclosure and what
                     the consequences may be if they do not fully disclose to us.
                     We review your client’s application to ensure that they are charged the correct premium
                     and that they qualify for the cover applied for. The questions answered in the application
                     usually provide us with sufficient information but sometimes we may need to obtain
                     further details. In some instances, this may require your client to see their doctor,
                     meet with one of our HealthScreen nurses or provide additional information by utilising
                     our telephone underwriting service. Additionally we may write to the client’s doctor
                     to gather further medical history.

                     WILL MY CLIENT EVER PAY MORE THAN MY QUOTED PREMIUM?
                     In some circumstances, we may only be able to offer cover with special terms
                     and additional premium loadings due to your client’s situation.

                     WHEN WILL WE CONTACT YOUR CLIENT?
                     We will only contact your client if we require essential information not already provided
                     on the application.

                     IS THE INFORMATION PROVIDED OVER THE
                     TELEPHONE CONFIDENTIAL?
                     All information provided to Sovereign is kept strictly confidential and will not be disclosed
                     to any other parties without your client’s authority – except where required by law.

                                                                                       Sovereign Underwriting Guide |   5
REMINDER                                                                                                            Back to Contents

What your client needs to tell Sovereign

Insurance is based                 1. ALWAYS TELL THE TRUTH

on the principle                   Insurance is based on the principle of utmost good faith. Put simply, your clients
                                   have a duty to provide truthful, complete and correct information about themselves,
of good faith                      including their health and medical history. Their duty of disclosure extends to the date
                                   the insurance is concluded between us. For example, they are required to tell us if they
                                   are diagnosed with a medical condition after the date of the application but before they
                                   agree to any terms of cover we offer you.
                                   If we offer to cover them, they will be insured based on the information they
                                   have provided.

                                   2. ANSWER QUESTIONS AS FULLY AS YOUR CLIENTS CAN
                                   Applying for insurance involves responding to a number of questions. Your clients
                                   answers need to include as much detail relating to their current and past circumstances
                                   as possible. While this may take time, it is important to ensure that we have all
                                   the information we need when we make the decision to insure your clients and
                                   on what terms.

                                   3. IF IN DOUBT, TELL US
                                   If your clients are uncertain of the relevance of any information, our advice is to include
                                   it on the application form because, even if they are not sure, it may be important to us.
                                   If someone else is completing the form on their behalf, it is important that they check
                                   that the information is correct and nothing has been left out.

                                   4. IF YOUR CLIENTS DON’T KNOW SOMETHING, SAY SO
                                   If your clients say they don’t know what the answer to a question is and we think we
                                   need more information about the answer to a question so we can offer them insurance,
                                   we will need to obtain the information from somewhere else. By signing the declaration
                                   and consent, your clients give us their consent to get this information.

                                   5. KNOW WHAT THEY ARE SIGNING
                                   By signing the declaration on their form, your clients are saying that they have
                                   answered all of the questions completely and to the best of their knowledge,
                                   as well as providing any other information that may influence our decision about
                                   their policy. If they are uncertain about any of their answers, they need to ask you
                                   or us before signing the declaration.

                                   6. HOW NON-DISCLOSURE AFFECTS CLAIMS
                                   When your clients make a claim, we may look further into their personal history.
                                   If we discover that they did not provide us material information that would have changed
                                   our decision to insure them or the terms of that insurance, we may amend the terms
                                   of their insurance policy. It does not matter if the new information is about a condition
                                   unrelated to their claim. If we discover that they haven’t told us something material,
                                   we may either alter the terms of their policy – which might affect their claim, or we may
                                   avoid their policy from its inception which means that they would not be able to make
                                   a claim as no policy would exist.

                                                                                                     Sovereign Underwriting Guide |   6
REMINDER                                                                                                              Back to Contents

What your client needs to tell Sovereign

                                   7. HELP US TO HELP YOUR CLIENTS WHEN THEY NEED TO CLAIM
                                   Depending on what your clients tell us on their claim form, we might need more
                                   information to make a decision about their claim. We may get this information by calling
                                   your clients, asking them to fill out another form or asking them to take a medical test.
                                   Sometimes we will need to get information from other people who may include their
                                   doctor, their employer, ACC, insurance companies or other government departments.
                                   By signing the claim form, your clients give us your consent to do this.

                                   8. KNOW WHAT THEY ARE CONSENTING TO
                                   We can only request information that we need to assess your client’s application
                                   for insurance or for payment of a claim. At all times, the information we hold about
                                   your client is their information, they have the right to access and, if it is wrong,
                                   to ask us to correct it.

                                   9. DO NOT BE AFRAID TO ASK
                                   If there is anything you or your client is not sure of, do not be afraid to ask us for help.
                                   Contact your Business Development Manager (BDM), Underwriter or phone
                                   0800 768 287.

                                                                                                       Sovereign Underwriting Guide |   7
NON-MEDICAL UNDERWRITING LIMITS                                                                                                                Back to Contents

Medical requirements for Life Cover/Family Protection Benefit
            Sum Assured
Age         $500,001 -         $750,001 -       $1,000,001 –       $1,500,001 -      $2,000,001 –     $3,000,001 –        $5,000,001 –      $10,000,001 +
Band        $750,000           $1,000,000       $1,500,000         $2,000,000        $3,000,000       $5,000,000          $10,000,000

            Application        Application      Application        Application
10–45                                                                                Medical 2        Medical 3           Medical 4         Medical 5
            Form               Form             Form               Form

            Application        Application      Application
46–50                                                              Medical 1         Medical 2        Medical 3           Medical 4         Medical 5
            Form               Form             Form

            Application        Application
51–55                                           Medical 1          Medical 1         Medical 2        Medical 3           Medical 4         Medical 5
            Form               Form

            Application
56–60                          Medical 1        Medical 1          Medical 2         Medical 2        Medical 3           Medical 4         Medical 5
            Form

61+         Medical 1          Medical 1        Medical 1          Medical 2         Medical 3        Medical 4           Medical 4         Medical 5

Medical requirements for Living Assurance and Progressive Care
            Sum Assured
Age         $500,001 - $750,000                 $750,001 - $1,000,000                $1,000,001 – $1,500,000              $1,500,001 - $2,000,000
Band

16–45       Application Form                    Application Form                     Medical 3                            Medical 4 Plus

46–50       Application Form                    Application Form                     Medical 3 Plus                       Medical 4 Plus

51–55       Application Form                    Medical 1                            Medical 4 Plus                       Medical 4 Plus

56–60       Medical 1                           Medical 1                            Medical 4 Plus                       Medical 4 Plus

61+         Medical 1                           Medical 3                            Medical 4 Plus                       Medical 4 Plus

Requirements                                                         Notes
                   Health Screen Nurse or GP Medical,                Application form     Personal Statement
Medical 1
                   Lipid Profile, HbA1c, LFTs                        Healthscreen         Medical can be done by either a Health Screen nurse or by a GP
Medical 2          Medical by GP, Lipid Profile, HbA1c, LFTs         Nurse/GP Medical     to determine current health
                   Medical by GP, Lipid Profile, HbA1c, LFTs,        Lipids               Cholesterol, Trigylcerides, HDL, LDL, Chol ratio
Medical 3
                   Creatinine, FBC, Hep B, HIV                       HbA1c                Blood test for glucose levels
                   Medical by GP, Lipid Profile, HbA1c, LFTs,
Medical 3 Plus                                                       LFT                  Liver Function Tests
                   Creatinine, FBC, Hep B, HIV, PMAR
                   Medical by GP, Lipid Profile, HbA1c,              Creatinine           A blood test to provide an indication of kidney function
Medical 4          LFTs, Creatinine, FBC, Hep B, HIV, Hep            FBC                  Full Blood count
                   C, Exercise ECG or Calcium Score, PMAR
                                                                     Exercise ECG         Exercise ECG to give an indication of heart health
                   Medical by GP, Lipid Profile, HbA1c, LFTs,
                   Creatinine, FBC, Hep B, HIV, Hep C,               Calcium Score        A scan to give an indication of heart health - contact your UW
Medical 4 Plus                                                                            to arrange this
                   Exercise ECG or Calcium Score, PMAR,
                   Plus PSA/Breast Exam/Mammogram                    PMAR                 Personal Medical Attendence Report to obtain a clients
                   Medical by GP, Lipid Profile, HbA1c,                                   medical history
                   LFTs, Creatinine, FBC, Hep B, HIV, Hep            COTS                 Cotinine urine test to determine smoking status - only required
Medical 5
                   C, Exercise ECG or Calcium Score,                                      by non-smokers applying for over $10,000,000 Life
                   PMAR, COTS                                        PSA/Mammogram        PSA Prostate test (male) Breast Exam or Mammogram (female)
                                                                                          or results from regular screening programme within 6 months
                                                                                                                              Sovereign Underwriting Guide |   8
NON-MEDICAL UNDERWRITING LIMITS                                                                                                                    Back to Contents

Medical requirements for Total Permanent Disablement
            Sum Assured
 Age        $500,001 -           $750,001 -           $1,000,001 –          $1,500,001 -           $2,000,001 –         $3,000,001 –           $4,000,001 –
 Band       $750,000             $1,000,000           $1,500,000            $2,000,000             $3,000,000           $4,000,000             $5,000,000

 16–45      Application Form     Application Form     Application Form      Application Form       Medical 3            Medical 3              Medical 4

 46–50      Application Form     Application Form     Medical 1             Medical 1              Medical 3            Medical 3              Medical 4

 51–55      Application Form     Medical 1            Medical 1             Medical 3              Medical 3            Medical 4              Medical 4

 56–60      Medical 1            Medical 1            Medical 1             Medical 3              Medical 3            Medical 4              Medical 4

 61+        Medical 1            Medical 1            Medical 1             Medical 3              Medical 3            Medical 4               Medical 4

Medical requirements for all Income Protection and Business Income
Protection Benefits*
 Annual Sum Assured
 $1 - $96,000                            $96,001 - $150,000                       $150,001 – $180,000                     $180,001 +

 Application Form                        Medical 1                                Medical 3                               Medical 4

* Disability Income Protection (Indemnity and Agreed Value), Mortgage and Income Protection, Business Continuity, Rural Continuity, Start Up Income
Protection, Locum Cover, Business Overheads, Essential Disability Income (maximum benefit levels may apply).

Requirements                                                         Notes
                    Health Screen Nurse or GP Medical,               Application form         Personal Statement
Medical 1
                    Lipid Profile, HbA1c, LFTs                       Healthscreen             Medical can be done by either a Health Screen nurse or by a GP
Medical 2           Medical by GP, Lipid Profile, HbA1c, LFTs        Nurse/GP Medical         to determine current health
                    Medical by GP, Lipid Profile, HbA1c, LFTs,       Lipids                   Cholesterol, Trigylcerides, HDL, LDL, Chol ratio
Medical 3
                    Creatinine, FBC, Hep B, HIV                      HbA1c                    Blood test for glucose levels
                    Medical by GP, Lipid Profile, HbA1c, LFTs,
Medical 3 Plus                                                       LFT                      Liver Function Tests
                    Creatinine, FBC, Hep B, HIV, PMAR
                    Medical by GP, Lipid Profile, HbA1c,             Creatinine               A blood test to provide an indication of kidney function
Medical 4           LFTs, Creatinine, FBC, Hep B, HIV, Hep           FBC                      Full Blood count
                    C, Exercise ECG or Calcium Score, PMAR
                                                                     Exercise ECG             Exercise ECG to give an indication of heart health
                    Medical by GP, Lipid Profile, HbA1c, LFTs,
                    Creatinine, FBC, Hep B, HIV, Hep C,              Calcium Score            A scan to give an indication of heart health - contact your UW
Medical 4 Plus                                                                                to arrange this
                    Exercise ECG or Calcium Score, PMAR,
                    Plus PSA/Breast Exam/Mammogram                   PMAR                     Personal Medical Attendence Report to obtain a clients
                    Medical by GP, Lipid Profile, HbA1c,                                      medical history
                    LFTs, Creatinine, FBC, Hep B, HIV, Hep           COTS                     Cotinine urine test to determine smoking status - only required
Medical 5
                    C, Exercise ECG or Calcium Score,                                         by non-smokers applying for over $10,000,000 Life
                    PMAR, COTS                                       PSA/Mammogram            PSA Prostate test (male) Breast Exam or Mammogram (female)
                                                                                              or results from regular screening programme within 6 months

                                                                                                                                    Sovereign Underwriting Guide |   9
FINANCIAL UNDERWRITING                                                                             Back to Contents

Life Cover      To calculate the amount of cover a client would qualify for multiply the client’s income by
                the factor below taking the client’s age into consideration.

                 Age                           Multiple of Income
                 To 35                         30x
                 36-45                         20x
                 46-50                         18x
                 51-55                         15x
                 56-60                         10x
                 61-65                         8x
                 65+                           IC

                To determine the financial evidence required, Sovereign aggregate all Life Cover sums
                assured, including all existing cover with both Sovereign and other companies. Life Cover
                has no maximum sum assured.
                The following table illustrates the financial underwriting requirements for Life Cover with
                high sums assured:

                                                                                $2m up to
                 Requirements                                       Up to $2m                     Over $3m
                                                                                $3m

                 Life and Health Application                             ü           ü                   ü
                 (Personal Statement)

                 As above, plus:                                                     ü                   ü
                 >> Confidential Financial Questionnaire

                 As above, plus:
                 Ancillary financial information
                 >> Last two years financial accounts
                                                                                                         ü
                 >> Loan agreement
                 >> Buy/sell agreement or partnership
                    agreement

                NOTE:
                Life Cover for business purposes, where the business valuation cover an cumulative
                Partnership/Share Purchase value of cover for all partners/shareholders exceeds $6.0
                million, full financial underwriting requirements will apply. For example, full accounts,
                including last two years’ Statement of Financial Performance and Statement of Financial
                Position for all entities and personal income tax returns.

                                                                                  Sovereign Underwriting Guide |   10
FINANCIAL UNDERWRITING                                                                                   Back to Contents

Critical Illness/   To calculate the amount of cover a client would qualify for multiply the client’s income by
                    the factor below taking the client’s age into consideration.
Trauma               Age                        Multiple of Income
                     To 35                      20x
                     36-45                      150x
                     46-50                      12x
                     51-55                      12x
                     56-60                      10x
                     61-65                      5x

                    To determine the financial evidence required, aggregate all Trauma Cover sums assured,
                    including all existing in-force cover with both Sovereign and other companies.
                    The following table illustrates the financial underwriting requirements for Critical Illness
                    benefits exceeding $1 million:

                     Applicant                                       Financial evidence required
                     Self-employed                                  >> Applicant’s business entity accounts (for
                                                                       all entities) including finalised Statement of
                     Sole trader, Partnership, Trust or employed by    Financial Performance and business entity tax
                     own company                                       return for the two most recent financial years
                                                                    >> Personal income tax returns for the
                                                                       corresponding years as above are also
                                                                       required.

                     Employees                                       >> Applicant’s personal income tax returns or
                                                                        IRD earning summary for the two most recent
                     No ownership / shareholding                        financial years
                     or financial interest in the business
                                                                     or
                                                                     >> A letter from the employer confirming the
                                                                        applicant’s salary package for the two most
                                                                        recent financial years.

                     Both employees and self-employed                >> Confidential Financial questionnaire
                                                                        completed by the applicant including a
                                                                        detailed report of:
                                                                         >> Earned/unearned person income
                                                                         >> Assets and liabilities
                                                                         >> Need for cover / how the benefit cover
                                                                            amount was calculated

                    Note:
                    Where the LAB maximum $2 million has been selected, the maximum TPD available is $3
                    million, total aggregation between LAB and TPD is not to exceed $5 million.

                                                                                         Sovereign Underwriting Guide |   11
FINANCIAL UNDERWRITING                                                                             Back to Contents

TPD             To calculate the amount of cover a client would qualify for multiply the client’s income by
                the factor below taking the client’s age into consideration.

                 Age                           Multiple of Income
                 To 45                         20x
                 46-50                         18x
                 51-55                         15x
                 56-60                         10x

                To determine the financial evidence required, Sovereign aggregate all sums assured,
                including all existing cover with both Sovereign and other companies.
                The maximum total sum assured for Total Permanent Disablement across all life insurance
                companies is $5.0 million.

                                                                                $2m up to
                 Requirements                                       Up to $2m                     Over $3m
                                                                                $3m

                 Life and Health Application                             ü            ü                  ü
                 (Personal Statement)

                 As above, plus:                                                      ü                  ü
                 >> Confidential Financial Questionnaire

                 As above, plus:
                 Ancillary financial information
                 >> Last two years financial accounts
                                                                                                         ü
                 >> Loan agreement
                 >> Buy/sell agreement or partnership
                    agreement

                Note:
                Where the LAB maximum $2 million has been selected, the maximum TPD available is
                $3 million, total aggregation between LAB and TPD is not to exceed $5 million.

                                                                                   Sovereign Underwriting Guide |   12
FINANCIAL UNDERWRITING                                                                                Back to Contents

Agreed Value DI/    New or Existing Disability Income Benefit   Financial evidence required

Loss of Earnings    Indemnity
                    Total cover less than $120,000
                                                                >> Declaration of Income (application)

                    Indemnity                                   Evidence of Income
                    Total cover greater than $120,000           >> Pay slip or contract if employed
                                                                >> Self Employed - Full set of finalised accounts
                                                                   for 2 years
                                                                >> Any other supporting evidence – PITR, BITR
                                                                >> For sums assured > $180,000 - confidential
                                                                   financial report
                    Agreed value / Loss of Earnings             Evidence of Income
                                                                   >> - Pay slip or contract if employed
                                                                   >> Self Employed - Full set of finalised
                                                                      accounts for 2 years
                                                                   >> Any other supporting evidence – PITR, BITR
                                                                   >> For sums assured > $180,000 - confidential
                                                                      financial report

                   Maximum Replacement Ratio
                   The maximum Replacement Ratio is the proportion of the income that can be insured.
                   >> For most Indemnity and Loss of Earnings policies, the maximum Replacement Ratio
                      is 75%
                   >> For most Agreed Value contracts, the maximum Replacement Ratio is 62.5%

                    Replacement Ratios
                    Indemnity and Loss of Earnings              >> 75% of the first $320,000 p.a.
                                                                >> 50% of the next $240,000 p.a.
                                                                   ($320,001 - $560,000 p.a.)
                                                                >> 20% for any excess income
                    Agreed Value                                >> 62.5% for the first $70,000 p.a.
                                                                >> 60% of the next $30,000 p.a.
                                                                   ($70,001 - $100,000 p.a.)
                                                                >> 55% of the next $220,000 p.a.
                                                                   ($100,001 - $320,000 p.a.)
                                                                >> 35% of the next $240,000 p.a.
                                                                   ($320,001 - $560,000 p.a.)
                                                                >> 20% for any excess income

                   Note:
                   Annual benefits in excess of $30,000 p.m. ($360,000 p.a.) can only be insured with a
                   maximum benefit payment period of two years.

                                                                                     Sovereign Underwriting Guide |   13
FINANCIAL UNDERWRITING                                                                              Back to Contents

Retirement           This benefit is only available as an add-on to Disability Income Protection Indemnity,
                     Agreed Value or Loss of Earnings.
Protection Benefit   Evidence of KiwiSaver scheme is not required.

                      New or Existing Disability Income Benefit   Financial Underwriting
                      Indemnity                                   Declaration of Income*
                      Total cover less than $120,000

                      Indemnity                                   Evidence of Income *
                      Total cover greater than $120,000

                      Agreed value / Loss of Earnings             Evidence of Income*

Mortgage and         Client can choose to insure either:

Income Benefit       >> 115% of mortgage repayments, or
                     >> 45% of their gross income
                     Max Sums Assured is $72,000 p.a. or $6,000 p.m.
                     Mortgage cover for holiday or vacation homes for personal use only (are not rented) can
                     be covered under the mortgage benefit up to 115% of the mortgage repayments.

Business             >> Agreed Value Maximum $8,000 p.m. ($96,000 p.a.) – business operating for 2 years

Overheads Benefit    >> Indemnity         No upper limit – business operating for 12 months

                                                                                    Sovereign Underwriting Guide |   14
FINANCIAL UNDERWRITING                                                                                     Back to Contents

Locum Benefit       Annual benefit amount           Financial requirements – indemnity proposals
                    ≥$120,000                       >> Full set of finalised accounts for last two years if self-employed

                    ≥$180,000                       >> Full set of finalised accounts for last two years if self-employed
                                                    >> Confidential Financial Report

Rural Continuity   35% of Gross Turnover up to $10,000 p.m. ($120,000 p.a.)

Benefit             Monthly Benefit                                   Financial Evidence
                    $0 to $5,000 p.m. ($60,000 p.a.)                  >> Financial Statement within the
                                                                         Application Form

                    $5,001 to $10,000 p.m. ($60,001 p.a. to           >> Financial Statement within the
                    $120,000 p.a.)                                       Application Form
                                                                      >> Last two years’ financial accounts

                    Financial Evidence Required for Optional Business Income Support
                    A copy of the current profit and loss statement for the business is required with all applications for
                    this benefit.

                                                                                           Sovereign Underwriting Guide |   15
FINANCIAL UNDERWRITING                                                                                 Back to Contents

Business Continuity    Monthly Benefit           Financial Evidence               Replacement Ratio Scale

Benefit                $0 to                     >> Personal Statement            >> 80% of Gross Profit
                       $5,000 p.m.               >> Business Continuity
                       (≤ $60,000 p.a.)             Supplementary Proposal

                       $5,001 to                 >> Personal Statement            >> 80% of Gross Profit
                       $15,000 p.m.              >> Business Continuity
                       ($60,001 p.a. to             Supplementary Proposal
                       $180,000 p.a.)            >> Last two-years’ financial
                                                    accounts

                       >$15,001 p.m.             >> Personal Statement            >> 80% of first $225,000 (gives
                                                 >> Business Continuity              $15,000 p.m.)
                       (≥ $180,001 p.a.)
                                                    Supplementary Proposal        >> 60% from $225,000 to
                                                 >> Last two-years’ financial        $500,000 (gives $13,750 p.m.)
                                                    accounts                      >> 40% from $500,000 to
                                                 >> Any further financials that      $800,000 (gives $10,000 p.m.)
                                                    may be required by Gen Re     >> 25% from $800,000 to
                                                    upon referral                    $1,340,000 (gives $11,250 p.m.)
                                                                                  >> This allowing a total of
                                                                                     $50,000 p.m.

                      >> Client can have personal DI/MR/RP alongside if financially justified or extending week
                         wait
                      >> $50,000 maximum per business, p.m.
                      >> Medically and financially cover is aggregated on an individual level
                      >> The business must own the policy, not an individual
                      >> The business must have been trading for at least three years
                      >> Key person / employee to be covered, must have been in their role at least two years
                      >> Proof of how the key person directly contributes to Gross Profit (and the percentage
                         they contribute) is required
                      >> The business must be a profitable and ongoing concern.
                      Note:
                      If client has or is applying for IP cover and there will be an overlap between the BCD and IP
                      benefits, and they are the business owner, the client’s total income is deducted from the
                      Gross Profit before calculating Business Continuity benefit.

                                                                                       Sovereign Underwriting Guide |   16
FINANCIAL UNDERWRITING                                                                              Back to Contents

Start Up Income      >> $9,000 max p.m.

Protection Benefit   >> No financial evidence is required
                     >> Has never previously owned a business
                     >> Has previously been self-employed and closes one business, then starts a new one
                     >> Has been in business for less than 36 months and only has one businesses

                      Time Line in Business   Monthly Benefit                  Maximum Benefit Term

                      0-12 months             $0 to $6,500                     12 months
                                              ($78,000 p.a.)

                      0-12 months             $6,501 to $9,000                 6 months
                                              ($78,001 p.a. - $108,000 p.a.)

                      Over 12 months          $0-$9,000                        2 years
                                              ($108,000 p.a.)

                                                                                    Sovereign Underwriting Guide |   17
INSURING NON-INCOME EARNERS                                                                     Back to Contents

                INSURING HOMEMAKERS
                The value placed on the homemaker can be difficult to quantify, as the work is generally
                not paid. However, if the homemaker is disabled or dies, there may be a financial loss to
                the family, as paid help may be required for raising children, maintaining the house, etc.
                The homemaker may also be a co-borrower or joint guarantor on loans.
                When assessing the level of cover for a homemaker, it is important to look at:
                > The personal exertion income of the income-generating partner
                > The total number of dependents and their ages
                > The level of any cover already in force.
                For homemakers, total Life Cover from all sources should not exceed $1,000,000;
                total Living Assurance and Progressive Care should not exceed $700,000 aged below
                50, $500,000 aged 50 and over and Total Permanent Disablement should not exceed
                $250,000. Disability Income (Indemnity only) and Mortgage Cover may be considered
                to a maximum of $30,000 pa on a 13 week wait period, occupation class 5 basis.
                Higher levels of cover may be considered if the following is provided:
                > A full report from the adviser, clearly setting out the need for cover
                > Independent financial verification
                > Confirmation that there is an equal or greater amount of cover on the
                  income-producing partner.

                INSURING CHILDREN
                When insuring a child, a full explanation must always be provided for the reason
                for the cover.
                Under New Zealand law, any insurance benefit payable on the life of a child under
                the age of 10 is limited to a refund of premiums and interest. Children over the age of
                10 are eligible for insurance under the same product range as is available for an adult.
                Generally, the sum assured for a child will be limited to $50,000 Life Cover only,
                until the child is 16 years old.
                NOTE: Total Permanent Disablement is not available for children, as it is covered by a
                definition related to employment and the ability to work, while Living Assurance is offered
                on diseases and events affecting adults, although a smaller/lesser Children’s benefit is an
                optional feature for children aged between 2 and 21 years.

                                                                                Sovereign Underwriting Guide |   18
HEALTHSCREEN®                                                                                                   Back to Contents

                HealthScreen® –
                A service that’s all about service
                HEALTHSCREEN
                HealthScreen® has been developed to provide you, and your clients, with an efficient,
                convenient and professional means of gathering medical information required for
                processing a risk insurance application. The time and effort required to process
                applications using HealthScreen® is significantly reduced. In the majority of cases
                submitted to Sovereign, some form of medical assessment and documentation – such as
                consultation notes or medical examination and blood tests – are required.
                All the HealthScreen® consultants are experienced New Zealand registered nurses who
                provide the service in most areas from Monday to Friday, during normal business hours,
                with some flexibility. Depending on the client’s availability, they will be seen within five to
                10 working days of the nurse receiving the client referral from the Sovereign Underwriter.
                Following the HealthScreen® visit, a copy of the client’s blood test results is usually sent
                to the client’s GP for assessment.
                HealthScreen® is a completely confidential service provided free of charge and at your
                client’s convenience. The service enables medical assessments to be conducted without
                your client having to leave their home or place of work. The service operates in Whangarei,
                Wellsford, Warkworth, Auckland, Hamilton, Tauranga, Rotorua, Taupo, Hawke’s Bay,
                New Plymouth, Wanganui, Palmerston North, Wellington, Nelson, Blenheim,
                Christchurch, Queenstown, Timaru, Dunedin and Invercargill and includes immediately
                surrounding areas.

                                                              Covered by HealthScreen®

                Medical 1

                Medical 2                                                              (Blood tests only)

                Medical 3 and Medical 3 Plus                                           (Blood tests only)

                Medical 4 and Medical 4 Plus                                          (Blood tests only)

                * Some conditions will necessitate direct contact with your client’s doctor by the Sovereign Underwriter.

                                                                                               Sovereign Underwriting Guide |   19
TELE-UNDERWRITING                                                                              Back to Contents

               Tele-Underwriting
               Telephone Underwriting is part of our underwriting service that helps us process an
               application quickly and simply. If we require further information, a Sovereign Underwriter
               will phone your client at a time and place that is convenient for them. They may ask
               questions about your clients health, occupation or hazardous pursuits so we can
               process the application. We use this additional information to assess the acceptance
               terms of the application.
               The information your client provides will be captured electronically and a copy of the
               questions and answers will be posted to your client for their records. We ask that they
               check that the details are correct and advise us of any amendments, if necessary,
               within seven days of receiving this information.
               In most cases, we will have all the information we require after the first phone call,
               however in some cases, we may need to call again. We may also need to collect more
               information from other sources such as a doctor or specialist. We will keep you informed
               if this becomes necessary.

                                                                              Sovereign Underwriting Guide |   20
RESIDENCY                                                                                  Back to Contents

            Insuring New Zealand Citizens and Permanent
            Residents Overseas
            Why do we take residency into account for underwriting?
            >> Due to political unrest, war, disease and different health standards some countries
               present a significantly greater risk than others
            >> It is more expensive and complicated to manage claims from a distance
            >> Medical risks can be exacerbated by distance from appropriate medical treatment
            The table below indicates what is required for Sovereign to offer insurance cover to New
            Zealand residents/citizens who intending to live/work overseas.
            The below table applies to First World countries such as Australia, USA and Europe.
            There is individual consideration for the Pacific Islands.

                                      Max time outside
             Benefit                                                  Mandatory
                                      New Zealand
             Life                     Unlimited                       Must be a NZ Citizen / Permanent
                                                                      Resident
             LAB                      Unlimited                       Must be a NZ Citizen / Permanent
                                                                      Resident
             TPD                      Unlimited                       Must be a NZ Citizen / Permanent
                                                                      Resident
             IP                       2 years                         Must be a NZ Citizen / Permanent
                                                                      Resident
                                                                      Refer IP considerations below
             Private health           Only available in Australia     Must be a NZ Citizen / Permanent
                                                                      Resident

            The below table applies to all other countries.

                                      Max time outside
             Benefit                                                  Mandatory
                                      New Zealand
             Life                     5 years                         Must be a NZ Citizen / Permanent
                                                                      Resident
             LAB                      5 years                         Must be a NZ Citizen / Permanent
                                                                      Resident
             TPD                      5 years                         Must be a NZ Citizen / Permanent
                                                                      Resident
             IP                       2 years                         Must be a NZ Citizen / Permanent
                                                                      Resident
                                                                      Refer IP considerations below
             Private health           Not available

                                                                           Sovereign Underwriting Guide |   21
RESIDENCY                                                                                   Back to Contents

            GENERAL UNDERWRITING CONSIDERATIONS:
            >> The life assured must be in NZ at the time of advice stage and signing of the
               application
            >> Normal underwriting applies, including medical, occupation, hazardous pursuits and
               financial
            >> Health cover is not worldwide cover. Only offer if outside of New Zealand for a short
               period of time (3 months or less) with an intent to return. This does not apply to
               Australia where they can claim and receive treatment without the need to return.
            >> Applicants are not covered by ACC when residing outside New Zealand
            >> IP can be offered if
               >> Currently working for New Zealand company while being transferred overseas by
                  this company
               >> Policy Owner must be based in New Zealand
               >> Premiums must be paid from a New Zealand bank account
               >> Must have a vested interest remaining in New Zealand
               >> There must be an intent to return to New Zealand

                                                                           Sovereign Underwriting Guide |   22
RESIDENCY                                                                                                                              Back to Contents

                                     Non-Resident Underwriting Rules
                                     As a basic philosophy, any insurance cover should be issued in the country where the
                                     “loss” will occur. In most cases, the life insured must be a citizen or permanent resident
                                     of New Zealand and currently residing in New Zealand to qualify for any type of cover with
                                     Sovereign.
                                     Sovereign recognise that some clients migrate to New Zealand with the intention to
                                     remain in New Zealand permanently with the intention of becoming citizens. Citizens of
                                     Australia, Cook Islands, Tokelau and Nuie are considered as New Zealand citizens for all
                                     benefits in terms of eligibility provided they are living full time in New Zealand.
                                     The following guidelines set out the current criteria required for those immigrants who are
                                     not yet permanent residents.

                                                    Type of Visa
                                                                                    Work Visa, Residence
                                                    Work Visa, Residence            Visa, Business Visa              Student Visa, Visitor Visa
                    Restrictions /
Benefit                                             Visa, Business Visa             < 24 months                      < 24 months &
                    Consideration                   ≥ 24 months                     &                                > 22 months
                                                                                    > 22 months

Life                Normal UW apply                 STD *                           STD *                            Territorial Ex*

                                                                                    Territorial Ex but IC to         Territorial Ex but IC to
LAB/PC              Normal UW apply                 Territorial Ex *
                                                                                    offer cover *                    offer cover *

                                                                                    Territorial Ex but IC to
TPD                 Normal UW apply                 Territorial Ex *                                                 Not available
                                                                                    offer cover **

                    Indemnity IP and                                                Territorial Ex but IC to
Income products *                                   Territorial Ex *                                                 Not available
                    Mortgage cover only                                             offer cover **

                    Any visa < 24 months
Health cover                                        Territorial Ex *                Not available                    Not available
                    - no health cover available

                                     * NZ must be the sole country of residence and they must have resided here for a minimum of 3 months
                                     **
RESIDENCY                                                                                    Back to Contents

            TERRITORIAL EXCLUSION WORDING:
            “It is hereby acknowledged that should a claim arise on the life of [Life Assured] where the
            event, condition, illness, accident or injury causing or contributing to the event, occurs at
            a time when the life assured is outside the territorial boundaries of New Zealand, Australia
            or the Cook Islands for a continuous period of more than 3 months, then no benefit will be
            payable under the [Benefits] Benefit attached to this contract, unless the client returns to
            New Zealand, Australia or the Cook Islands at the end of the 3 month stated period. It is
            further acknowledged that should the life assured leave New Zealand, Australia or the
            Cook Islands on a permanent basis, then this policy shall be cancelled and no benefit will
            be payable from that date onwards.”

            VISA REQUIREMENTS
            >> Health cover – There must be visas totalling 24 consecutive months
            >> If the current visa has less than 6 months remaining confirmation that the life assured
               has applied for PR or sought to extend their visa is required
            >> Immigration medicals are acceptable in lieu of non-medical limits requirements
               provided these are less than 6 months old
            >> Normal underwriting applies
            >> Applicants must have a New Zealand postal address and premiums coming from a
               New Zealand bank account, any claims will also be paid into this account
            >> The life assured must have a vested interest in New Zealand – property, family,
               employment
            >> For Income Protection the applicant must be working for an independent recognised
               employer and not a family run business unless the position is at a senior level and it
               makes sense.
            >> Spouse/Student mirror the term of the main Visa holder
            >> A Key Person to a New Zealand business who has no intent to become a resident can
               still apply. The policy owner needs to be the Company. The life assured must have
               been living in New Zealand for at least 3 months and all visas must have a continuous
               stay of 24 months

                                                                            Sovereign Underwriting Guide |   24
FAST FORWARD                                                                                   Back to Contents

               Fast Forward Offer of Terms
               Fast Forward removes the need for a client’s signature on a Special Terms Acceptance
               Letter. This process provides you and your client with an opportunity for us to issue
               your policy as soon as possible.
               Your Underwriter will still contact you to discuss the offer of terms. Once the offer
               is finalised, you will receive a decision via email directly from the Underwriter.
               This will include an offer of terms (as it will appear in the policy document) so that you
               can forward and discuss this with your client and ensure that they understand the exact
               terms of the offer and their acceptance.
               It is important to remember that the Offer of Terms will not include any premium details.
               If you require a Special Terms Acceptance Letter with premium information included,
               please contact our New Business Team or wait for this to be forwarded to you in
               due course.

               WHAT DO YOU NEED TO DO?
               Please ensure you document all discussions you have with your client regarding the
               terms of offer and acceptance. Once your client is happy to accept the terms, you can
               use Fast Forward by sending us a confirmation email. If the owner is different to the life
               assured the policy owner needs to be included in the email.
               If the client/owner does not have an email this facility is unfortunately, not be able. We
               will then require the Special Terms Acceptance Letter to be signed by your client in order
               to issue the policy.
               Please note Fast Forward is only available for new business applications.
               We will accept emails from an authorised representative from your office as long as your
               client has been copied into the email.
               Please send your confirmation email to NBSupportTeam@sovereign.co.nz and include
               your client’s name and policy number in the subject line.

                                                                              Sovereign Underwriting Guide |   25
BUSINESS SAFEGUARD FACILITY                                                                               Back to Contents

                INFORMATION REQUIRED

                 Medical                              Financial                          Standard Non-medical
                 Underwriting Requirements            Underwriting Requirements          underwriting

                 At time of underwriting              At time of underwriting            At time of underwriting
                 >> The client is eligible for this   >> Financial requirements          >> Based on five times the
                    benefit provided are not             for base sum assured as            original sum assured
                    loaded more than 100%                per usual underwriting
                                                         guidelines

                 When exercising an option            When exercising an option          When exercising an option
                 >> No medical underwriting           >> Valuation of the life assured   >> Any terms offered for
                    required, provided the               to the business provided by        the initial cover such as
                    client has or is not madding         an independent valuer or           hazardous pursuits or
                    a claim under the Life Cover         accountant                         occupational loading,
                    benefit                           >> Evidence of loan guarantee         exclusions or medical
                                                         and any other contractual          loading will be carried
                                                         or financial evidence              forward on any increase in
                                                                                            cover under this facility

                >> This benefit allows the client to increase their Business Life/TPD/Trauma Cover when
                   required, due to the client’s financial interests in the business, their loan, or their value
                   to the business increases.
                >> Available for Business Life, TPD and Living Assurance
                >> Requests need to be made within three-months of the relevant business event
                >> A life assured can only make two increases in any 12 month period.
                >> The Life Cover benefit for a life assured under this policy after the use of this facility
                   cannot exceed the lesser of five times the original Life Cover benefit or $10 million
                >> The TPD benefit for a life assured under this policy after the use of this facility cannot
                   exceed the lesser of five times the original TPD benefit or $5 million.
                >> The Trauma benefit for a life assured under this policy after the use of this facility
                   cannot exceed the lesser of five times the original Life Cover benefit or $2 million.

                                                                                         Sovereign Underwriting Guide |   26
BUSINESS SAFEGUARD FACILITY                                                                        Back to Contents

                The method chosen to value the business or the client must be in accordance with
                established business valuation practice for the industry. The independent qualified
                accountant or business valuer cannot be a family member, business partner, employee or
                employer of the life assured. The method of valuation and valuer must be satisfactory to
                Sovereign.

                FUTURE INCREASES
                >> Medical evidence is not required when requesting this increase, but it is subject to
                   financial underwriting.
                >> To apply for the increase in cover, the client needs to write to Sovereign to satisfy us
                   that the value of the life assured’s financial interest is at least equal to the requested
                   increase to the amount of cover.
                >> They must include a valuation of the business or valuation of the life assured to the
                   business (as provided by an independent qualified accountant or business valuer),
                   and/or evidence of the loan guarantee, and any other contractual or financial
                   evidence we may request.
                >> They can do two increases in any twelve month period but it cannot be exercised
                   within six months of the risk commencement date.

                                                                                  Sovereign Underwriting Guide |   27
BUYBACK BENEFIT                                                                                        Back to Contents

Life Cover Buyback   Following an accelerated Comprehensive Living Assurance Benefit claim the optional Life
                     Cover Buyback Benefit allows the Life Cover Benefit to be reinstated without the need to
                     provide further medical evidence.
                     >> The Life Cover can be reinstated up to the level immediately before the claim,
                     >> A Life Buyback options is available following a claim paid on one of the follow
                        conditions and where the client has survived a period of six months:
                         >> Paraplegia
                         >> Quadriplegia
                         >> Diplegia
                         >> Hemiplegia
                         >> Alzheimer’s disease
                         >> Permanent blindness
                         >> Permanent loss of hearing
                         >> Dementia
                         >> Permanent loss of use of limbs
                         >> Multiple sclerosis
                         >> Idiopathic Parkinson’s disease
                     >> For all other conditions where a claim has been paid, the survived period is 12 months
                        after the claim payment date
                     >> The Life Cover Benefit can be reinstated following a full or a partial payment claim
                     >> Only one Life Cover Buyback reinstatement will apply per life assured per policy
                     >> The Life Cover Benefit must be reinstated within 30 days of the date that it is first
                        eligible to be reinstated
                     >> No Life Cover Buyback Benefit is available if the life assured has suffered a Terminal
                        Illness Benefit, whether or not a claim has been made

                                                                                      Sovereign Underwriting Guide |   28
BUYBACK BENEFIT                                                                                  Back to Contents

Living Assurance   Following a Comprehensive Living Assurance Benefit claim the optional Living Assurance
                   Buyback Benefit allows the Comprehensive Living Assurance Benefit to be reinstated
Buyback Benefit    without the need to provide further medical evidence.
                   >> The life assured must have had a claim full Comprehensive Living Assurance Benefit
                      claim that has reduced the sum assured to a nil balance, and have survived a period
                      of 12 months.
                   >> The Comprehensive Living Assurance Benefit must be reinstated within 30 days of the
                      first anniversary of the Comprehensive Living Assurance Benefit claim payment.
                   >> Any premium loadings or exclusions which applied to the original Comprehensive
                      Living Assurance Benefit will also apply to the reinstated Comprehensive Living
                      Assurance Benefit.
                   >> Any related condition as a result of the claim, as determined by Sovereign, will be
                      excluded from the life assured’s reinstated Comprehensive Living Assurance Benefit
                      cover.
                   >> Only one Comprehensive Living Assurance Benefit reinstatement will be allowed over
                      the life of this policy for a life assured.
                   >> Reinstatement of the Comprehensive Living Assurance Benefit is not available
                      following a partial claim payment.
                   >> No Comprehensive Living Assurance Buyback Benefit is available if the life assured has
                      suffered a Terminal Illness Benefit, whether or not a claim has been made

                                                                                Sovereign Underwriting Guide |   29
OCCUPATION CLASSIFICATIONS                                                                         Back to Contents

                We use the occupation section of the Application form to assess the risk that an individual
                occupation presents. This assists in determining not only the cost
                of benefits, but also eligibility for certain benefits.
                Some of the factors to be considered are:
                > The nature of the duties performed e.g. is the client working at great heights or with
                  dangerous substances?
                > The number of hours worked – do they work excessive hours? A person working a
                  60-hour work week is more at risk of suffering work stress or burn-out due to the large
                  number of hours worked than a person working fewer hours
                > Are they working full-time or part-time?
                > Does the client work from home? If so, do they have a purpose-built office space?
                > Are they intending to change occupations?

                A comprehensive list of occupations is available in Sovereign’s Illustrations
                and Quote Builder.
                 Occupation Classifications for Disability Income and Total Permanent Disablement
                 Occupation Code       Description
                 Class 1, 11 and 21    Professional white-collar workers who possess university qualifications,
                                       e.g. lawyers, doctors, accountants, etc. Also includes individuals
                                       employed by an independent employer who are executives or senior
                                       managerial white-collar workers with salary packages in excess of
                                       $75,000. We will also consider working directors of their own companies
                                       provided they have a structured salary package in excess of $75,000,
                                       their business has been established more than two years and their
                                       duties are totally sedentary.
                 Class 2, 12 and 22    Clerical or administrative white-collar workers who do not perform any
                                       manual work or salespeople not involved with deliveries. It does not
                                       include workers working in or visiting non-office environments.
                 Class 3, 13 and 23    Certain skilled technicians and proprietors in non-hazardous industries
                                       involved in light manual work, e.g. jewellers, computer technicians,
                                       café/coffee shop proprietors. Also includes supervisors of blue-
                                       collar workers, provided that no more than 10% of their time is spent
                                       performing light manual work. Fully qualified licensed trades people.
                                       Details of qualifications must be provided.

                 Class 4, 14 and 24    Skilled or semi-skilled manual workers and heavy machinery operators
                                       who are not exposed to high-risk accidents or health hazards. Unskilled
                                       workers and labourers are not included in this occupation class.
                 Occupation Group      Occupation Class
                 Group A               Employed applicants.
                                       Classes 1, 2, 3 and 4

                 Group B               Self-employed with more than three years’ experience
                                       in current business. Classes 11, 12, 13 and 14

                 Group C               Self-employed with less than three years’ experience
                                       in current business. Classes 21, 22, 23 and 24

                 Other                 Class 5: Housewife/Househusband/Student
                                       IC: Individual consideration
                                       U: Uninsurable for benefits to age 65*
                                       *Individual consideration given to two-year and five-year restricted
                                       benefit products.
                                                                                  Sovereign Underwriting Guide |   30
OCCUPATION CLASSIFICATIONS                                                                        Back to Contents

                Hint
                A self-employed person can include:
                > A sole trader
                > A partnership
                > Commission-only salesperson
                > A contractor
                > Any company in which the insured and all-family interest have a greater than
                  25% shareholding
                > Any trading or family trust where the insured has a beneficial interest.

                Classifications
                In order to assist in determining occupation classes, the following classifications apply:
                U:   Uninsurable
                1:   Professional/Executive
                2:   Clerical
                3:   Light manual/Tradesperson
                4:   Manual
                5:   Not in paid employment

                Defining full-time versus part-time:
                Full-time: defines a person who works 20 hours or more, over at least 3 days per week.
                Part-time: defines a person who works less than 20 hours per week or less than 3 days
                per week.
                Please refer to the Occupational Class lists on the following pages for a complete list
                of occupations.

                Hazardous Occupations
                Although most occupations are insurable at standard rates for life insurance, there are
                certain occupations, which are obviously hazardous and additional premium (loading)
                is required to cover the extra risk(s) incurred. A greater number of occupations will
                require extra premium and/or exclusions in respect of disability benefits.
                Not all hazardous risks are physical in nature, there may be one of a number of other risks
                which might include:
                > Physical risk e.g. working at heights or with explosives
                > Environmental risk e.g. mining, asbestos removal / exposure
                > Moral risk e.g. exposure to drugs, criminal activities or Sexually Transmitted
                  Infection(s) (STIs)
                > Sensitivity to claim – people with strict medical criteria e.g. Pilots
                > Trade sensitive – jobs that are subject to ups and downs e.g. real estate
                > Health risk e.g. working excessive hours or specific medical conditions.
                It is important to give a full disclosure of any hazards involved in your client’s occupation
                as this will allow the underwriter to correctly assess those risks and apply terms,
                if required, appropriately.

                                                                                  Sovereign Underwriting Guide |   31
HAZARDOUS PURSUITS                                                                                  Back to Contents

               PASTIMES OVERVIEW
               Many people enjoy participation in a wide variety of pastimes, outside of their occupation,
               some of which mean there is additional risk for the benefits we offer.
               The Application asks for as much detail as possible about these pursuits to ensure
               we are offering the best terms available for these activities. We endeavor to cover as
               many pursuits and pastimes as possible, please feel free to call our underwriting team
               for possible terms. We have endeavoured to include as many common pursuits and
               pastimes as possible; however, should your client participate in a pastime not covered in
               this document,
               please feel free to call our underwriting team for possible acceptance terms.
               Provided are example wordings for loadings and exclusions for a given pastime.
               It is important to note that when a loading is stated for a particular pastime,
               an exclusion may be elected instead.
               EXCLUSIONS AND LOADINGS
               If, at the point of sale, your client elects to take an exclusion instead of a loading,
               or if an exclusion is to be automatically imposed, please have them SIGN AND DATE
               the following sample statement:

               “I, [the Policy Owner], hereby accept that should death [or disability or both] of
                [life assured] occur as a direct or indirect result of participation in, or preparation for,
                [pastime] then no benefit will be payable.”
               Signed
               Dated

               Or, if any automatic loading will be required, and the client elects to pay for the extra risk,
               please have them SIGN AND DATE the following sample statement:

               “I, [the policy-owner], hereby accept that the premium payable for the life of [life assured]
                will be loaded [loading] for [pastime].”
               Signed
               Dated
                                                                                    .

                                                                                   Sovereign Underwriting Guide |   32
BENEFIT ALTERATIONS                                                                                Back to Contents

                What do you need to do at Application time?
                1. Continue to complete the Policy Replacement Advice form when replacing cover,
                   ensuring the requested ‘details of policy or benefit being replaced’ section
                   is completed in full.
                2. Advise your client to retain the following items as they may be asked to supply them
                   should they need to claim:
                   a. Their replaced policy schedule (alternatively, this can be attached to the
                      application form if more convenient)
                   b. Confirmation of their replaced policy’s cancellation.
                3. Familiarise yourself with the eligibility criteria below.

                IMPORTANT: For the stand-down waiver to be applied at claim time, the replaced cover
                must have been cancelled on commencement of the replacement cover.

                ELIGIBILITY CRITERIA FOR WAIVER OF STAND-DOWN PERIODS
                ON REPLACEMENT BUSINESS
                To receive a stand-down waiver, the following criteria applies:
                Sovereign policies issued prior to February 2001 (including any Legacy policies):
                These polices are not eligible for a stand-down waiver. This is because pre-February 2001
                policies do not have the Guaranteed Enhancement Benefit.
                For all other policies (internal and external replacement business):
                Stand-down periods on like-for-like transfer amounts can be waived providing:
                > The stand-down period relates to a condition covered by the replaced policy and
                  meets the specific condition criteria under the new Sovereign policy
                > The policy being replaced was fully underwritten – i.e. no auto-accepted or
                  ‘Essential’-type policies
                > Any cover being ‘replaced’ must have been cancelled on commencement of the
                  new Sovereign cover
                > The stand-down period on the policy being replaced must have expired.

                NOTE:
                > If the new Sovereign policy covers conditions that did not exist on the ‘replaced’ policy,
                  the standard stand-down period for the condition will apply
                > The standard stand-down period will apply for any increase in the sum assured.

                                                                                  Sovereign Underwriting Guide |   33
BENEFIT ALTERATIONS                                                                              Back to Contents

                > Legacy Term Life benefits and accelerated Total Permanent Disablement can be
                  transferred to a new policy without underwriting by using the Legacy Risk Transfer
                  application form (available from the mailroom or as a .pdf on SovLink).
                > The premium structure on the new policy can be Rate for Age or Level, but benefit
                  indexation will only be available if it was present on the original policy.
                > If the legacy policy has fixed-term benefits (i.e. the cover ceases at a pre-defined age),
                  and there is less than five years to the expiry of the existing policy, then a Declaration
                  of Continued Good Health will be required if the client wishes to transfer to a Rate for
                  Age or Level premium policy.
                > The new policy will be subject to the standard policy terms and conditions that are
                  applicable at the time of replacement.
                > Occupation class, smoker status, loadings and exclusions present on the existing
                  policy will be carried forward to the new policy, unless evidence is provided to
                  support a change.
                > Full underwriting will apply to any increase in cover, and full commission will be paid
                  to the adviser on any increase in premium.

                Stand-down Waivers on Replacement Business
                Stand-down waivers on like-for-like business replacement are not underwritten at
                application time. Instead, we’ll assess the waiver at claim time, should the claim event
                occur within a stated stand down period. Acceptance is at Sovereign’s sole discretion.
                In some cases, to help with this decision, we may request a copy of the replaced policy
                schedule, to verify the information supplied and/or confirmation of the previous policy’s
                cancellation.
                These stand-downs include the ‘suicide’ clause (intentional self-inflicted act) for
                Life Cover or the three-month stand-down period clause for Progressive Care and
                Living Assurance.

                                                                                Sovereign Underwriting Guide |   34
You can also read
NEXT SLIDES ... Cancel