Exempt mortgage-related life insurance says AFA

Advised life insurance taken out as a safeguard around a home mortgage should be exempted from the Government’s tough new rules around add-on insurance, according to the Association of Financial Advisers (AFA).

However, the AFA is arguing that insurance sold under general advice or no advice should not be exempt.

In a submission responding to the Treasury discussion around the Government’s reform to the sale of add-on insurance products, the AFA warned that the situation within which advisers recommended life insurance at the time of taking out a home mortgage appeared to have been overlooked.

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It said that, given the scale of the debt involved in a home loan, the issue needed to be addressed.

The AFA said it appeared that the situation of life insurance attaching to the taking out of a home loan appeared to have been inadvertently caught up under the Government’s proposals.

“It is often the case when someone takes out a home loan that they might also take out life insurance,” it said. “The fact that they have taken on significant debt to finance the purchase of a home is a very sensible trigger to consider the adequacy of their existing level of life insurance.”

The AFA submission said that this was often done by a financial adviser working within the office of a mortgage broker or by someone to whom a mortgage broker referred clients.

“Generally, the advice process takes place before the loan is taken out, often during the loan application process to coincide with the completion of the loan and to ensure the client is covered immediately upon commencement of the loan,” it said.

“The products made available as part of this process are the standard retail advised life insurance products with good terms and conditions and much higher claims payment ratios.”

The AFA submission said that the Government had signalled that there were grounds for certain products to be exempt and that advised life insurance should be included amongst the exemptions.

“We consider that it is essential that these exemptions were also extended to all cases where personal financial advice is provided and where the client received a Statement of Advice,” it said. “In our view, this deferred sales requirement should be limited to general advice and no advice business models.”

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Once you have sent an email promising them some Qantas points, you can do what you like after that...lol

They need to make sure the junk insurance (ALI) offered by Mortgage Brokers is not able to be sold directly to their clients (or at all) under general advice. Why they are even aloud to do this is beyond me.

Just more of the same from a subset of society that act like they are their own lord and saviour.

In somewhat related note, bank transfers with humorous or dodgy titles are now delaying mortgage and credit applications.

Finance pirates acting like the moral authority... what a fxcking joke.

All my transactions will be titled rimJOB, slickHit, cokeSUB, cockSlop, strippers, concreteSlippers, blood$$$, hitPay, deathNote etc going forward.

I hope this moral intrusion by bankers stalls lending until it crashes the realestate and domestic economy.

Who am I kidding, realestate is the domestic economy. Pull your collective head in fxckwits.

You idiots have about as much right to be morally or ethically judgemental as pedo catholic priests.

Toodleoo MutterFxclers

Yeah, great idea. Why dont we also exempt SMSF super advice, intra fund advice, insurance advice sold directly to the client over the phone, personal loan advice, car credit advice, car credit add on insurance, mortgage advice, off the plan investment advice, general investment selection advice and basically any advice not given buy a qualified professional who are now forced to suplement their 20+ years of experience coupled with the highest qualification recognised world wide, with a formal degree.

Oh thats right. All these products and strategies can already be provided without any formal training, compliance/Statement of Advice, professional indemnity insurance or ongoing training and the only people r3commending any of these strategies who have to comply with the Best Interest Duty are the financial advisres.

If a client comes to me and asks to increase his/her life insurance form $1 million to $2 million because they had another child i have to spend at least 2 hours on compliance, SOA, Best interetst duty, Fact find etc. Just to do the increase.

One set of rules for everyone dealing with any of these financial products please

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