Fundamentals – Insurance Covenant Insurance strategy (formulate, review & give effect to) addressing: – Kind of insurance – Levels of cover – Basis for decision to offer the kind at that level having regard to demographic composition

Fundamentals – Insurance Covenant Cost – Consider; and – Only offer insurance of a kind and level if the cost ‘does not inappropriately erode the retirement income of beneficiaries. “This recognises the importance of trustees balancing the needs of members with respect to insurance cover offered and retirement incomes” (EM)

Fundamental – Insurance Covenant (...Cost) “... the duty requires the trustee to consider the trade ‑ off between the insurance cover provided and the retirement incomes of members. Therefore, it does not apply to the circumstances of individual members. ” (EM)

Insurance Strategy – options MySuper insurance requirement: – Death & Permanent Incapacity (s68AA(1)) Subject to conditions the trustee determines are reasonable (3) Consistent with a condition of release – Members may opt-out of either or both (5) Subject to cost or unavailability Sustainability of current benefit design?

Insurance Strategy

Adviser experience Claims payments for policy types not payable within super – IP ancillary benefits and trauma: – 49% of number of our claims; and – 67% of the total value of our claims.

Insurance Strategy – Benefit What can you do for a member with an income of $180,000 and a need for $900K of life cover?

This? Insurance type LifeTPDTraumaInc ProtectIn Super? Premium Type Life/TPD$900K YesLevel / Age based Income Protection $11,250/mthNoStepped Totals$900K $0$11,250/mth

How about this? Insurance typeLifeTPDTraumaInc ProtectIn Super? Premium Type Life/TPD$900K $900K YesLevel TPD (Own Occ) - Linked NoLevel Trauma $200K NoLevel TPD $750K YesStepped TPD (Own Occ) - Linked NoStepped Trauma $550K NoStepped Income Protection $11,250/mthNoStepped Totals$900K$1.65M$750K$11,250/mth

Insurance advice Disclosure Calculators General advice Personal advice – On what?

Too compliance focussed? Let regulation drive innovation: – What is the basis for your decision on what kind and level of benefits you provide? – Why does your cover not inappropriately erode retirement savings? – How are you assisting your members individually?