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Building a recommendation – remember to substantiate your data assumptions

Whatever methods you use for modelling for insurance requirements, and building your recommendations, one important raw material is good data. Remember if you say that something costs about $x or if interest rates are likely to be y%, then you need to be able to substantiate the use of that assumption.

Tuesday, October 4th 2022, 12:12PM 1 Comment

by Russell Hutchinson

What data is most commonly used in insurance portfolio modelling? For us the key data elements and their associated sources are as follows:

  • Taxation brackets
  • Social welfare benefit levels
  • Funeral costs
  • Age-adjusted life expectancy
  • Age of independence, retirement, and of loss of independence
  • Childcare costs
  • Savings rates
  • Appropriate discount rates
  • Income inflation
  • Cost price inflation, both current and expected
  • Expected return on investment

These are for the most part readily available on a quarterly basis and at worst, at least annually. Go grab them and use them to update your recommendations. Here are some of the favourite sources for the information above:
Inland revenue has a calculator, of course, for personal tax rates. If you need to talk personal tax, then referring to the IRD’s calculator is going to keep you on the side of the angels.

For most working clients if one of them is sick or disabled, payments can be very low or non-existent. Simply showing the level of assistance can be a powerful tool to demonstrate the value of insurance. You may like this site:

What about when people retire? Of course, you may want to use your client’s goal, but either way, this article is a great resource:

What would childcare cost? Another scary number that many parents are already familiar with – but what if you need to show a client who hasn’t entered the difficult world of time to work versus cost of care trade-offs? Then try this site:

For funeral costs the citizens advice bureau has a good site with details.

Financial facts and data are best sourced from the Reserve Bank of New Zealand to lend a gold-plated seal to your assumptions. The landing page gives you two of the most important pieces of data, then the Key Statistics section will help you with the rest.


Tags: Russell Hutchinson

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Comments from our readers

On 5 October 2022 at 9:25 am w k said:
there are some more important factors to be considered too. i reckon, base on those recommendations, it'll be about 5-6 hours of work.

would be nice if you or some expert can put a figure as to how much the adviser who have gone through this whole process should be paid if the other party decides to walk away without doing any business.

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