NZQA Level 5 31865 Environment and Concepts Assessment 2026 | Professional IQ College

Life, Disability & Health Insurance Assessment

New Zealand Certificate in Financial Services Version 2
Level 5
Credits 5

Introduction

This assessment contains the information you need to determine competency for Life, Disability & Health Insurance for:

Unit Standard 31865 – Demonstrate and apply knowledge of life, disability, and health insurance services environment and concepts.

This document contains:

Assessment Guidance
Assessment Tasks 1-7
Student Declaration Form
Assessment Decision and Schedule Form

Assessment Guidance

The Assessment Process

To achieve the unit standard, you must complete and return to Professional IQ the following documents:

• Assessment answers for all questions or tasks
• Student declaration form completed and signed

The assessment is competency based and focuses on the application of learning in your future role as a financial adviser. The study guide provided for this unit standard contains the information necessary to develop your knowledge and understanding of the life, disability and health insurance.

The qualified assessor will use their professional judgement and subject-matter expertise to evaluate your assessment ensuring that it is:

• Valid: meets the outcomes and evidence requirements of the unit standard being assessed
• Fair: a fair representation of what you can do and or know against the outcomes of the unit standard
• Authentic: it must be your own work and must not be copied from any course materials or other sources
• Sufficient: answers must be full and complete enough for the assessor to judge competency
• Consistent: answers are consistent with the assessor guidelines and national consistency requirements.

The evidence you submit must comply with any policies & procedures of your organisation, codes of practice of relevant professional bodies or any relevant legislative and regulatory requirements.

Students With Specific Needs

If you have specific learning needs, you should have informed Professional IQ of these at the time of enrolment. This enables the Academic Manager to discuss with you what appropriate support is required to complete your study and assessments.

The Assessor Role

The assessor will consider all written evidence provided by you and decide if it is competent or not yet competent.

The assessor may require you to provide more evidence on one or more questions or tasks, if in their judgement they feel the answer is insufficient or incorrect.

Where there is not enough evidence to make a decision on competency, your assessor will send you a Further Evidence Required request (FER) which means you will need to supply further information. They may contact you to have a professional conversation or to clarify a point in your answer.

The assessor will complete the Assessment Decision Form, including any feedback and return the result to you within 10 working days of receipt.

Please retain a copy of your assessment work and assessment results.

The Appeals Process

An explanation of the appeals process can be found in the Student Handbook located on Professional IQ under Student Resources.

If you disagree with an assessment decision, please follow the guide and complete an Assessment Appeal Form and send it to Student Support at Professional IQ. An independent assessor will be asked to investigate the appeal.

Resources

A copy of the unit standard can be downloaded from NZQA.

It is important you fully understand the outcomes and evidence requirements of the unit standard including any special notes, references and definitions applicable. The study guide is your main resource for this assessment.

You should read the study guide for this unit standard (as part of your course work) to enable you to answer the tasks listed in this assessment document.

References

This list is provided as a guide for students who are seeking further sources of information on this module:

• Code of Professional Conduct for Financial Advice Services;
• Consumer Guarantees Act 1993;
• Fair Trading Act 1986;
• Financial Markets Conduct Act 2013;
• Financial Service Providers (Registration and Dispute Resolution) Act 2008;
• Financial Services Legislation Amendment Act 2019;
• Insurance Intermediaries Act 1994;
• Insurance Law Reform Act 1977;
• Insurance Law Reform Act 1985;
• Privacy Act 2020;
• relevant industry codes of conduct;

Assessment Tasks

Answer all the following questions in the blue shaded cells and save your assessment document with a new name – e.g. 31865 John Smith 17 Aug.

Task 1 (US 31865 PC 1.1 And 1.2)

Using the table below, discuss the main purpose and key provisions of the listed Acts and Codes, and how each may constrain or impact on your daily work activities.

You need to include at least 2-3 key provisions from each Act or Code unless otherwise specified.

Task 2 (US 31865 PC 2.1 And 2.2)

For each of the following key roles within life, disability and health insurance organisations and the industry explain their purpose and responsibilities. Your answer should be approximately 120-150 words for each role.

• Underwriters
• Claims processors
• Actuaries
• Complaints handlers
• Product developers
• Advisers and other distributors
• Reinsurers
• Chief Medical Officer

 Task 3 (US 31865 3.1)

3a There are two parts to this task.

1. In approximately 80 words each, describe pure risk and speculative risk, and provide an example of each type of risk that is relevant to life, disability or health insurance.

2. Explain in approximately 50 words the difference between pure risk and speculative risk.

3. 3b Define each of the following concepts and provide an example for each in a client life, disability or health situation. Your answer should be approximately 80 – 100 words for EACH of the concepts:

• Insurable risk
• Perils
• Hazards (Explain 3 types)

Task 4 (US 31865 PC 3.2)

Briefly describe in approximately 80 words each, each of the following 5 risk principles and concepts:

• Utmost good faith
• Compensation not enrichment
• Adverse selection
• Anti-selection
• Law of large numbers

 Task 5 (US 31865 PC 3.3)

5a Explain in approximately 100 words what is meant by a client’s personal tolerance for risk in respect of their attitude?

5b Explain in approximately 100 words, what is meant by a client’s capacity to cope with risk?

 Task 6 (US 31865 PC 4.1)

This assessment task is based on the following case study.

Fred and Ginger have recently bought a house. They have come to you as they currently have no life and health insurances in place at all, and their mortgage adviser recommended they have at least something in place to cover the mortgage.

From your conversation with them, you find out the following information:

Fred is 28 years old and is employed as a site supervisor for a building company. While most of his role revolves around paperwork and managing staff and orders, he has been known to pick up the tools and help with the actual construction from time to time. Fred is relatively healthy; he has had a broken leg from a motorbike accident in the past, and his father had a heart attack (but survived) at age 50. His annual salary is $95,000. Fred has an average BMI but does drink significantly higher than the recommended weekly drinks, at around 30 standard drinks a week.

Ginger is 32 years old, and runs a riding school for young children, as well as looks after her and Fred’s 18 month old twins. She has two stable hands to look after most of the day to day care of the horses, but Ginger takes care of their exercise, and also the actual riding instruction. She does not currently ride competitively but plans on returning to competitive show jumping when the twins turn 3. The net profit of the riding school has been fairly consistent around $35,000 over the last three years, with staff salaries totalling $57,000. Ginger has had no major incidents from horse riding, but about four years ago did have a benign mole removed from her arm. She is approximately 170cms, with a weight of 49kg. She has mentioned to you that she lost a lot of weight after the twins were born, and because she is so busy, can’t seem to put it back on.

The new mortgage is $540,000, and Fred and Ginger have a car loan of $32,000. They have no other debt. They have bought a house in a good primary school zone, and plan to stay there if possible until the twins turn 12 and start intermediate. The riding school buildings and land are leased.

Based on Fred and Ginger’s situation, evaluate their exposure to risks, and what the probability, potential severity and impacts of these risks are. You need to identify SIX risks.

For each of the risks you identify, evaluate the probability of the risk occurring and the potential severity (or impact) of the risk consequences.

Risk consequences include:

• direct losses
• consequential losses
• hidden losses

 Task 7 (US 31865 PC 4.2)

There are two parts to this question, using the case study and your answers in the previous task.

Identify at least one non-insurable risk that Fred and Ginger face and identify ways they could manage this risk, using the risk management techniques listed below. Your answer should be about 100 words in length and include all the risk management techniques except for risk transfer.

 Select two of the insurable risks from your answer to task 6 and set out a risk management plan for each risk, using the risk management techniques below. Your answer should be approximately 100 words for each risk management plan.

• Identification
• Avoidance
• Control
• Financing
• Acceptance
• Transfer

31865 Unit Standard Title: Demonstrate And Apply Knowledge Of The Life, Disability, And Health Insurance Services Environment And Concepts.

Outcome 1: Explain And Apply Knowledge Of The Regulatory Framework When Providing Life, Disability, And Health Insurance Services.

• Explain key provisions of legislation, regulations, and codes of conduct that impact the daily operations of life, disability, and health insurance service providers.
• Apply knowledge of key provisions of legislation, regulations, and codes of conduct when providing life, disability, and health insurance services.

Range: Evidence of three examples is required.

Outcome 2: Explain Key Roles In Life, Disability, And Health Insurance Organisations.

2.1 Explain the purpose of key roles in life, disability, and health insurance organisations.

Range: Key roles may include but are not limited to – underwriters, claims processors, actuaries, complaints handlers, product developers, advisers and other distributors, reinsurers, Chief Medical Officers.

2.2 Explain the responsibilities of key roles in life, disability, and health insurance organisations.

Range: Key roles may include but are not limited to – underwriters, claims processors, actuaries, complaints handlers, product developers, advisers and other distributors, reinsurers, Chief Medical Officers.

Outcome 3: Demonstrate Knowledge Of Risk Types And Key Life, Disability, And Health Insurance Principles And Concepts.

3.1 Describe types of risk and the relevance of life, disability, and health insurance products to those risks.

Range: Insurance risk types may include but are not limited to – pure risk, speculative risk, insurable risk, perils, hazards.

3.2 Explain how key insurance principles and concepts relate to life, disability, and health insurance.

Range: Insurance principles and concepts may include but are not limited to – utmost good faith, compensation not enrichment, adverse selection, anti-selection, law of large numbers.

3.3 Explain personal tolerance for risk in terms of attitude and capacity to cope with risk.

Outcome 4: Apply Risk Assessment And Risk Management Approaches To Life, Disability And Health Insurance Situations.

4.1 Evaluate exposures to risk in terms of probability of risk, and potential severity and impact of risk consequences.

Range: Exposures may include but are not limited to – direct losses, consequential losses, hidden losses.

4.2 Apply risk management approaches to life, disability and health insurance situations.

Range: Evidence of three examples with a range of requirements and complexities; must include one non-insurable risk; risk management approaches may include but are not limited to – control, retention, avoidance, financing, and transfer.