Life Protection (This May Be Term Assurance Or Mortgage Protection)

To commence this letter, please include the “Introduction to suitability letter” section and amend as necessary. The introduction can be found within the “Suitability letters” section of the document library.

Life protection (this may be term assurance or mortgage protection/decreasing term assurance) The reasons for my recommendation are based on the key issues arising from the confidential fact find. The key issues identified are summarised as follows: (At this point details of the clients needs should be summarised from the fact find and should include areas such as the reason for the cover i.e. mortgage/loan protection, dependents etc., term, sum assured, current circumstances, any prospective circumstances, budget amount, existing insurance/protection details, clients own views etc.)

Single Policy Sales

We have discussed the option of setting your policy up on a joint basis and compared this to having two single life plans.

I have made you aware that if you take the policy out as a couple in joint names and a claim arises during the policy term then the cover will cease upon payment of the sum assured. Having two single life policies each for the full sum assured means that should a claim arise and only one of you is affected then the cover under your partner’s policy will remain in force.

We have discussed the costs of both options and I have made you aware that two single life plans is more expensive. However you have confirmed you understand the price and cover differences and are happy to proceed with the plan on a joint life basis/ 2 single lives basis. (Delete as appropriate)

Recommendation

. Provider . Product

Reasons for my recommendation (Ensure that the selected wording is correct and relevant to the individual client)

I have recommended a Mortgage Protection Plan/Decreasing term assurance policy because

a) You have a loan that you wish to be repaid on your death

b) Your current arrangements would not repay your mortgage should you die before the end of the mortgage term.

I have recommended an initial amount payable on death of £(enter sum assured) because

a) It coincides with the amount of your mortgage

b) It covers the amount of all your outstanding credit commitments

c) Other reason – free type

This cover will cost £(enter premium), payable on (a monthly/an annual/a quarterly) basis this fits into your budget of £(enter budget amount).

If you keep your policy for X years, the total premium you will have paid will be £XXXX. This assumes that your premium remains unchanged.

October 2011 – Version 8 (X = mortgage term, policy term or term to retirement if plans ends on retirement)

If your monthly premium changes for any reason, the actual amount you will have paid over the term of the policy will be different from this figure.

Your monthly premium may change if you have selected an automatic increase option e.g. annual inflation linking. Your monthly premium may also change as a result of a premium review of if you have altered or increased your policy in any other way.

You need this cover for a term of (enter term) years because

a) It coincides with the term of the mortgage

b) It coincides with the term of other credit commitments

(If the term extends beyond clients expected retirement age) The term of the policy goes beyond your expected retirement age. You confirmed that the premiums would still be affordable into retirement.

I have recommended (enter provider name) because

a) They offered the cheapest policy that meets (all/most) of your needs

b) Other reason – free type

The policy will start on acceptance by (enter provider name).

The policy should start on (enter specific date) because

a) You intend to exchange contracts on your purchase/remortgage on this date and wish the cover to coincide with this.

b) This coincides with the start of other credit commitments

Please tell me when you have a definite date to exchange contracts on your purchase/remortgage to enable me to ensure that the cover is on risk at the same time.

Benefits over Cost

I have made you aware that there was a less expensive alternative provided by (enter provider name) which I did not recommend because (enter reason). The difference in cost over the full term of the plan, between the policy I have recommended and the cheaper alternative is (enter amount – e.g. if the cheaper alternative policy is £2 per month less, on a 20 year policy, the amount will be £480)

Important My recommendations are based upon the information provided however, as you were unable/unwilling to provide full details of your current arrangements, you may affect the suitability of the policies recommended.

October 2011 – Version 8 We have talked through the relevant parts of the policy document/Key Features Document/Statement of Price and I have drawn your particular attention to the following points:

 The aims of the plan  Significant benefits  Limits and exclusions  The duration of the plan  The price of the plan  When it will pay out  What conditions are covered by critical illness and the definitions  When the plan will not pay out  The risk factors

I have verbally explained in greater detail the following points to you:

 What the product is and why it is important  Why I have recommended single plans or joint cover  The limitations of the cover  The amount and basis of the premium  The importance of disclosing all relevant facts accurately  The different types of insurance, level term or decreasing term  That cover will cease at the end of the term or after death of the first policy holder  That both single and joint policies are available  That two types of monthly premium are available, a guaranteed monthly premium or a reviewable premium.  The advantages of placing your policy in trust

You have told me that it is important/not important (delete as appropriate) to protect against the financial consequences of death.

You have told me that it is important/not important (delete as appropriate) that if you or your partner (delete as appropriate) were to suffer a critical illness or permanent disability, to have a method of repaying your mortgage and other loans

(If an existing policy is being replaced) My recommendation is to replace your existing policy because (enter valid reason for replacing cover).

Replacing an existing contract

When replacing an existing non-investment insurance contract, the recommendation must evidence how the new contract is more suitable than the existing contract. Please enter reasons here. For guidance, please refer to “Replacing existing contracts” in the document library, under “Training & Competency”.

I have verbally explained the following points to you:

 Why the new contract is more suitable for you than the previous contract  That we have compared the main exclusions  The cost comparison between the new contract and the previous contract  That some of the illness definitions in the new contract are different to the previous policy and that you have considered this  That there may be defined illnesses in your previous contract that you will not be in a position to make a claim with the new contract

October 2011 – Version 8  That you have considered guaranteed or reviewable premiums  That you will not cancel your existing contract until the new policy is in force

I confirm that you do not have any existing policies that could be used to provide the same benefits as the plan that I have recommended. OR I did not recommend using any existing policies to provide you with the same benefits as the plan that I have recommended because (enter reasons).

I have considered the following alternative products (enter any products that have been discounted) and believe that none of these are as suitable because (enter reasons).

Waiver of Premium (WOP)

I have explained the advantages of incorporating this benefit into your mortgage protection plan, these are (enter benefit) and you have (accepted my recommendation / declined my recommendation because - enter reason e.g. you felt that your existing provisions would be adequate etc. / inadequate but you felt that this was outside your current level of affordability.)

Waiver of Premium is not available on this type of policy.

Guaranteed Premiums

You have chosen premiums on a guaranteed basis. This means your premiums will stay the same throughout the term of your plan.

Reviewable Premiums

You have chosen reviewable premiums. This means that the premiums are likely to change over the term of your plan. Initially reviewable premiums will be cheaper than guaranteed premiums. A possible advantage of reviewable premiums is that they can be more affordable than guaranteed premiums at the outset of your plan, making cover more affordable when your plan starts. Over time however, the premium is likely to increase. As a result, the overall cost could surpass that of a guaranteed premium.

Critical illness benefit

I have explained the advantages of incorporating this benefit into your mortgage protection policy, these are (enter benefit) and you have (accepted my recommendation / declined my recommendation because - enter reason e.g. you felt that your existing provisions would be adequate etc.. / inadequate but you felt that this was outside your current level of affordability.)

OR Critical illness is not available on this type of policy.

We discussed the potential consequences of failing to have protection, however you declined my recommendation because (enter reason)

October 2011 – Version 8 There may be other benefits that can be added to the policy in addition to Waiver of Premium and Critical Illness all benefits taken with the policy should be documented.

Trusts

Increasing the value of your estate on death by having life insurance benefits(s) paid into the estate is not desirable, and can be avoided by placing the life insurance benefit(s) in trust for your chosen beneficiaries. This can be achieved whilst also retaining the income benefits that are incorporated in your plan.

We recommend you consider that this plan makes use of a trust. If you indicate on the proposal form that the policy should be placed in trust then the appropriate trust forms will be forwarded to you once the plan is in force. We recommend that legal advice should be taken when effecting trusts – please speak to your solicitor.

You should consider, when the benefits of some protection policies are realised, it is possible that an inheritance tax liability could be created. This will depend on your circumstances at that time, but may be mitigated by placing such policies in trust. Should you feel that this circumstance could arise, I advise you to seek Independent Legal Advice to decide whether this would be beneficial to you.

Replacing an existing contract

When replacing an existing non-investment insurance contract, the recommendation must evidence how the new contract is more suitable than the existing contract. Please enter reasons here. For guidance, please refer to “Replacing existing contracts” in the document library, under “Training & Competency”.

Commission

Pink Home Loans will receive a commission of £X for arranging this policy. A percentage of this amount will be paid to me when the policy is activated.

To finish this letter, please include the “Closing summary suitability letter” section and amend as necessary. The closing summary can be found within the “Suitability letters” section of the document library.

October 2011 – Version 8