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Licensing for Insurance Products AdviceIn order to conduct life insurance business in Hong Kong, Shenton Limited holds two (2) Regulatory Licenses:
1. Hong Kong – member of the Professional Insurance Brokers Association and is licensed to provide advice for (1) Long Term Insurance, (2) Long Term (investment-linked) Insurance and (3) General Insurance.
These licenses provide access to Hong Kong and other offshore insurance products in the global finance space.
2. Australia – ASIC has issued an Australian Financial Services License No. 342895 to Shenton Limited.
This license provides access to Australian insurance products for those clients who hold either Australian or New Zealand Passports, or hold PR Immigration VISA to Australia.
Life Insurance Products for Doctors
We have existing Doctors in Australia and Hong Kong as clients for more than the last 10 years. The products on offer to Australian or New Zealand Doctors include:
1. Term Life Insurance - unlimited cover amountLife Cover provides a lump sum benefit payable upon death. The policies are guaranteed renewable each year, meaning that the premium is calculated each year and will normally increase as you get older. This form of insurance is flexible in that the sum insured can be altered to suit personal financial circumstances without incurring any financial loss (not investment-linked).
.The death benefit is normally paid to your dependents or your estate. This lump sum could be used to repay bank debts and/or provide a lump sum that can be drawn upon to create income, and so help the family maintain their current lifestyle. In addition, it will help keep family’s plans on track and pass on an investment asset to your family.
In Hong Kong, Chinese banks freeze bank accounts when a key person dies. If the spouse is owner of the policy, the benefit is paid direct to the spouse. Their immediate concern is to replace family income.
In relation to specific business loans to medical administration companies or Doctor’s business practice, surviving Doctors in the Practice could receive the Death Benefit and reduce or eliminate bank debt.
2. Total and Permanent Disability (TPD)This form of insurance is normally available as an optional benefit on a Term Life or Trauma policy. The benefit is a lump sum paid if you become Totally and Permanently Disabled. You must be disabled to such an extent that you are unlikely to ever engage in:
• Your “Own (professional) Occupation”
OR
• Any Occupation, by way of education training or experience.
Own Occupation definition is by far a more beneficial policy to be assessed under, however it is likely to be the most expensive. The Any Occupation definition is much more restrictive in that it includes ‘any occupation’ to which you may have been suited by education, training and/or experience.
Many of the features of Term Life Insurance will apply equally to TPD. The sum insured is payable in the event of TPD and is generally restricted to being no more than the death benefit. The lump sum could be used to help pay for bank debt reduction/elimination, income generation and all other facets pertaining to circumstances of permanent disablement.
In relation to specific business loans to medical administration companies or Doctor’s business practice, surviving Doctors in the Practice could receive the TPD Benefit and reduce or eliminate bank debt.
3. Trauma (Critical Illness)Critical Illness insurance is available as an optional benefit on a Term Life insurance policy or as a stand-alone policy. A trauma payment is likely to be paid should you suffer any of the covered conditions. This could include, but is not limited to: major head trauma from accident, heart attack, stroke, cancer, paraplegia, multiple sclerosis, Parkinson’s disease, chronic liver, lung and kidney disease and many more, up to 45 defined life threatening illnesses.
The lump sum Trauma Benefit could be used to cover debt reduction/elimination or to cover costs related to making lifestyle adjustments, necessary home and/or car modifications, or medical treatment costs, work alterations and peace of mind etc.
4. Disability Income Protection (Sickness & Accident) – up to A$40,000 per MonthDisability Income Protection is available from a wide range of Life insurers as a ‘stand alone’ policy. It provides a replacement monthly income should you become Temporary But Totally Disabled (TTD) due to sickness or accident, however, the disablement need not be of a permanent nature. Each company defines Total Disablement, but generally the benefit is paid if you are not working and are unable to earn your normal income due to illness or injury. The benefit paid could be used for living expenses, monthly debt commitments, regular investment and other costs, to keep your family’s lifestyle and financial plans on track.
In some cases for key-persons, an employer can buy and hold a DIP policy over the life of a key-person employee.
5. Superannuation Cover OptionWe recommend clients take up several options including Superannuation Option which should maintain existing contributions up to the term of the Disability Income policy. Subject to limitations, up to 20% of annual income may be available.
6. Business Expenses CoverBusiness expenses insurance is available to self-employed Professionals and Partners of Professional Practices who wish to cover their business expenses should they be unable to work because of illness or injury. Payments are generally made on a monthly basis and can reimburse up to 100% of approved business expenses. Expenses payments are generally limited to 12 months benefit period.
I have been successful with my Accounting skills to gain cover from Australian insurance cover for Hong Kong business expenses.
7. Blood Borne Diseases Cover – up to A$1 millionBlood Borne Disease Insurance provides a lump sum (called the Blood Borne Disease sum insured) if the insured person (medical professional) is accidentally infected with HIV or the Hepatitis B or Hepatitis C virus during the course of their regular occupation.
Blood Borne Disease Insurance must be taken with at least one other type of policy issued. It is not available for ownership under Australian superannuation funds.
8. Health Severity Events – up to A$3 million ($5 million for all claims)In June 2010, a new revolution in product design came onto the Australian market, called Health Severity Events (HSE).
If a client is holding Critical Illness and TPD above, suffers heart attack and paid a claim, existing Critical Illness and TPD policies are terminated and you become uninsurable thereafter.
With Health Severity Events, there are 5 different grades of severity and the higher the grade, the more you get paid. The HSE policy does not cancel after 1 or several claims, unless you die.
If you use up all of the cover, it tops up again to 25% of the maximum cover amount and keeps topping up with new and different HSE events.
You can retain the policy up to age 99. HSE cover:
1. Allows you to hold several types of cover in one comprehensive policy;
2. Provides cover for a wide range of health events with payments based on the severity of the health condition;
3. You can receive multiple claims over the life of the policy;
4. Cover may apply to health conditions in earlier stages, increasing your chance of receiving a payment and potentially providing access to funds at earlier stages than other Critical Illness policies;
5. Claims can be paid in stages as health conditions deteriorate;
6. Premiums may be significantly cheaper than many alternative policies (for same Sum Insured across all types, insurance cover).
7. You can choose to add disability income protection cover and child trauma cover.
For those between 45 and 65, there is around a 28% probability of a trauma or disability claim. After one claim, there is a 24% probability of a second claim, but not necessarily from the same critical illness cause. Receiving financial relief is a God-send to take away some of the stress and allow you to focus on the more important issues that need to be attended to.
Why buy HSE? You only have to look at the pollution outside of the window.
9. Child Trauma Insurance – up to A$250,000Child Trauma Insurance provides a lump sum (called the Child Trauma sum insured) if the insured child dies, is diagnosed with a terminal illness or suffers a Trauma Condition for which they are covered.
Ownership of Protection Policies
Where there are actual insurable needs, there are several entities who need to own policies over the lives of Doctors and their Occupational Performance:
(1) A Doctor would own the Disability Income Protection policy over his life.
(2) A Doctor’s spouse would own Term Life lump sum insurance covers over the Doctor, for the financial security of their family.
(3) A Doctor may own TPD, Trauma and Health Severity Events cover over his life or the spouse may own the policies, so she can attend to financial commitments while the Doctor is suffering from illness.
(4) The medical administration company may own the lump sum covers to protect financial exposures such as bank debt for buying business real property (Surgery Practice Rooms).
(5) The Doctors operating under a Partnership Agreement may have a Business Succession Plan with BUY-SELL Agreements to buy out the Partner who is leaving the Practice due to death, total disablement or critical illness.
(6) Australian Doctors may be a member of an Australian personal superannuation plan or other Pension Plan arrangement, to which life insurance arrangements can be funded in order to meet future retirement goals and objectives, if in the event of premature retirement due to death or total disablement.
In summary, Australian institutions provide ‘World Best Practice’ life insurance products. Highly sophisticated life products designs for high functionality have better matching features to the risk exposures of Professionals, such as Doctors.
We have the knowledge, experience and highly developed Financial Planning techniques for expert delivery to arrange to deal in all of the above insurable situations.
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