UNDERWRITING GUIDE March 2019 - Sovereign Illustrations
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ADVISER REFERENCE GUIDE UNDERWRITING GUIDE March 2019
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 | 2WELCOME 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 | 3UNDERWRITING 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 | 4UNDERWRITING 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 | 5REMINDER 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 | 6REMINDER 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 | 7NON-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 | 8NON-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 | 9FINANCIAL 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 | 10FINANCIAL 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 | 11FINANCIAL 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 | 12FINANCIAL 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 | 13FINANCIAL 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 | 14FINANCIAL 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 | 15FINANCIAL 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 | 16FINANCIAL 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 | 17INSURING 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 | 18HEALTHSCREEN® 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 | 19TELE-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 | 20RESIDENCY 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 | 21RESIDENCY 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 | 22RESIDENCY 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 | 24FAST 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 | 25BUSINESS 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 | 26BUSINESS 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 | 27BUYBACK 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 | 28BUYBACK 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 | 29OCCUPATION 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 | 30OCCUPATION 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 | 31HAZARDOUS 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 | 32BENEFIT 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 | 33BENEFIT 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 | 34You can also read
