According to Investment Trends’ 2015 Planner Risk Report – compiled from a survey of 852 advisers – 75 per cent of advisers say they use their platform to write insurance business.
The research also revealed that more advisers intend to use their platform to write insurance business in the future.
“By 2016, in 12 months’ time, [we estimate] four out of five, or 79 per cent of advisers will use their platform to [write] their insurance business,” Investment Trends’ senior analyst, King Loong Choi, told ifa.
“The key benefits that these planners perceive when using platforms for insurance are really around three key things,” Mr Choi said.
“Firstly, [advisers find] it easier for them to manage their client’s premium payments; secondly, is for consolidated reporting; and lastly, because it helps reduce the direct cost of insurance to clients,” he said.
Investment Trends found BT Wrap was the most widely-used platform by advisers followed by Colonial First State’s FirstChoice.
“Part of the reason for those two is, if you think about the platforms that advisers use in general, it is typically just BT Wrap and CFS First Choice,” Mr Choi said.
“If you look at who some of the other widely used platforms are, there is also OnePath One Answer, North and MLC MasterKey and those rounded off the top five most widely-used platforms, respectively.”
Researching adviser satisfaction across the platforms, Investment Trends found an increased level of adviser satisfaction with the platforms they use.
“About 73 per cent of planners rated their primary platform as either good or very good overall,” Mr Choi said.
“Compared with 2014, last year, that was up from 62 per cent,” he said.
There are several providers who offer split IP which overcomes the deficiencies of IP inside super. It really allows the best of both worlds. best definitions and when combined with level premiums for younger policy owners, lower chances the cover will lapse due to low impact on cash flow.
CJL: There are plenty of reasons why you would do it and it’s quite the opposite of lazy advice to secure a superior tax and or cash flow outcome by using a clients super to fund insurance.
Considering the looming threat of a 3 year clawback you could argue that it’s the only safe place to fund a clients cover since they are far less likely to have life events drive a lapse. HOWEVER; in many ways I fear that this will be the next big media event after hundreds of people are left with no superannuation savings. The “right” amount of cover may not be affordable and clients always have that natural tension between what they need and what they can afford to pay. Funding through super kicks the can down the road and reduces the clients objection to pay for cover. 2017’s headline “Thousands left with no super thanks to unscrupulous insurance sales”.
Life/TPD Inside super. Trauma & child trauma always outside (obviously). IP circumstantial depending on cash flow, lifetstage etc. IP can often be cheaper inside due to annual premium discount (or avoiding frequency loading) and annual super roll-over tax rebate discount of 15%. But then need to weight it up against after tax premium (take into account tax deduction).
IP inside super is suitable in many situations, but not always a given.
To use a clients super balance to pay insurance premiums, for anything other than life/TPD, is lazy advice!
How many link IP out side of super, how many understand the gross deficiency’s of IP inside of super, how many care?
Unless you can demonstrate genuine cash flow issues why on earth would you do it????