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Building The Best Insurance Report - Financial Details

Part eight in our series on building the best insurance report with the least wasted time covers financial details – and the importance of focusing on the high-level numbers. That's because one of the places more time than ever is wasted is on collecting financial information which is never used in the advice process. That’s a pretty controversial statement – so let’s look a little closer.

If you are not sure about how to find this page in the needs analysis process, it’s simple. At hit the ‘get crunching’ button and put in basic information to enable you to do a quote, hit next. Then look at the top of the screen and find the ‘needs crunching’ button and click on that. You need to complete the scope and priorities page, complete objectives, and then click next and you are at financial details.

Our intention is to ensure we have done the job right without putting the client through hell. Many clients dread the need to produce a detailed personal budget that often comes with applying for financial products. It is nice if you can avoid that. With most personal insurance advice, you can.

Budget advisers in New Zealand, working with limited time and usually pro-bono, have come up with a very simple solution which we have adopted. They ask for income, and then they ask how much you save. The difference covers everything else – it’s all spent. That’s one way the simple needs analysis keeps things simple. If you need to look at discretionary spending as a separate item then you can (at your option) also do that in the needs crunching tool. But we do not need to know exactly how much is paid on the electricity bill versus the gas bill. 

Similarly, with assets and liabilities we are focused on financial assets and so we encourage you not to include the value of the family home, or cars for personal use. Only include investment assets that can be readily consumed. There are exceptions to this general rule, which you may need to examine in more detail outside of this tool, but generally the aim will be to retain the family home – and if an insurable event occurs, pay it off and retain it for the use of the family – not liquidate it. That’s the basis on which this part of the analysis rests. Likewise, a joint balance sheet for two lives is presumed.

Later, when you come to look at specific issues, you will note that we collect after-tax debt repayments and these can be used as a sum-insured for mortgage protection insurance. KiwiSaver balances are retained because these can be accessed in the event of death or total and permanent disability. Note that you can enter information using the frequency that is more comfortable for your client – yearly, monthly, or fortnightly. We do not attempt to replicate table mortgage calculations, so you must take care to properly enter both the loan amount and the repayment amount.
When you are happy with all the financial details you are ready to click next and review the different needs analysis calculations available to you.

Those will be covered in the next part of this series.


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