Planit:Detailed Insurance Policies Case Study

From Planipedia

See another example of detailed insurance policies that includes Islamic takaful policies as well.

Example Problem One:

The Woodhavens are concerned that the event of Harold’s death would cause financial instability and want to know the funds required to replace his income. They have given you the detailed information for their insurance:

• Harold’s Whole Life Policy of $200,000 is designated to Donna on his death. Right now he pays a premium of $150 each month.
• Donna’s Whole Life Policy of $80,000 is designated to Harold on her death. Right now she pays a premium of $750 each month.
• Harold’s Group Life Coverage of $50,000 is company paid and Donna is the beneficiary.
• Donna’s Group Life Coverage of $50,000 is company paid and Harold is the beneficiary.
• Harold’s Group Disability Policy has a waiting period of 171 days and is valid until age 65.
• Donna’s Personal Disability Policy has a waiting period of 31 days, and she pays a premium of $100 each month.

Solution using the Insurance Screen:

Use the navigation panel to go directly to the Insurance screen.

1. To enter the new detailed information, click Policies in the right hand corner.
2. Click Policy again in the right hand corner
3. Enter a Description for Harold’s personally owned life insurance.
4. Set the Account Type and Regulatory Type to Insurance Policy
5. Ensure that the Ownership is set to 100% for Harold Woodhaven.
6. Here you can enter the Payment Mode of Monthly, and the $150.00 Payment Amount.
7. Click Save
8. Harold’s personal life policy should now appear on the summary screen. Click Coverage beside it to add benefits to the policy.
9. Enter a Description and set Type to Whole Life.
10. The Insured is Harold
11. The Death Benefit is $200,000.
12. Set Donna as the Beneficiary in the drop-down menu. Click Save

To add Harold’s group life and disability coverage:

1. Click Policy again in the right hand corner
2. Enter a Description for Harold’s company paid insurance.
3. Set the Account Type and Regulatory Type to Insurance Policy
4. Ensure that the Ownership is set to 100% for Harold.
5. Here you can enter the Payment Mode as any of the options, since the Payment Amount is $0
6. Click Save
7. Harold’s Group Life Policy should now appear on the summary screen. Click Coverage beside it to add value to the policy.
8. Enter a new Description and set the Type to Group Life.
9. The Insured is Harold, and the Death Benefit is $50,000.
10. Set Donna as the Beneficiary in the drop-down menu.
11. Click Save
12. Since Harold’s disability coverage is a part of the same policy, you can include the benefits under this same group policy. Click Coverage beside it to add value to the policy.
13. Enter a new Description and set the Type to Disability (Group).
14. The Insured is Harold, and the Monthly Benefit is $2,000 as was previously revealed.
15. The Waiting Period (Days) can be set to 171 as indicated, and the or Until Age field to 65.
16. Click Save

To add Donna’s personally owned life insurance:

1. Click Policy again in the right hand corner
2. Enter a Description for Donna’s personally owned life insurance.
3. Set the Account Type and Regulatory Type to Insurance Policy
4. Ensure that the Ownership is set to 100% for Donna.
5. Here you can enter the Payment Mode of Monthly, and the Payment Amount of $75.00
6. Click Save
7. Donna’s Personal Life Policy should now appear on the summary screen. Click Coverage beside it to add value to the policy.
8. Enter a new Description and set the Type to Whole Life.
9. The Insured is Donna, and the Death Benefit is $80,000.
10. After setting Harold as the Beneficiary in the drop-down menu, click Save

To add Donna’s group life coverage:

1. Click Policy again in the right hand corner
2. Enter a Description for Donna’s company paid life insurance. (See Figure 6.4)
3. Set the Account Type and Regulatory Type to Insurance Policy
4. Ensure that the Ownership is set to 100% for Donna.
5. Here you can enter the Payment Mode as any of the options, since the Payment Amount is $0
6. Click Save
7. Donna’s Group Life Policy should now appear on the summary screen. Click Coverage beside it to add value to the policy.
8. Enter a new Description and set the Type to Group Life.
9. The Insured is Donna, and the Death Benefit is $50,000.
10. After setting Harold as the Beneficiary in the drop-down menu, click Save

To add Donna’s disability insurance:

1. Click Policy again
2. Enter a Description for Donna’s personally owned disability insurance.
3. Set the Account Type and Regulatory Type to Insurance Policy
4. Ensure that the Ownership is set to 100% for Donna. Figure 6.6
5. Here you can enter the Payment Mode as Monthly, and the Payment Amount as $100
6. Click Save
7. Donna’s Disability Policy should now appear on the summary screen. Click Coverage beside it to add benefits to the policy.
8. Enter a Description and set the Type to Disability (Personal).
9. The Insured is Donna, and the Monthly Benefit is $1,000 as was previously revealed.
10. The Waiting Period (Days) can be set to 31 as indicated, and the Index Rate is 4.0%: to be indexed with the client’s inflation assumption.
11. Click Save

At the end, all of your detailed insurance policies should look like Figure 6.7.

Click here to see an additional case study on detailed insurance for either the event of death or disability.

Check out an additional exercise for entering detailed Eldershield and Medishield Coverage in Singapore.

Go to the exercise to test your knowledge on entering detailed insurance information.