Prepare for Tier 2 RG146 general insurance (general advice) by treating it as a boundary subject: the advice classification, the product's mechanics and the law of the insurance contract must be applied in the same conversation. Learn the general-versus-personal advice distinction alongside the disclosure moment, then attach general insurance product behaviour and contractual principles to it. Test yourself with scenarios, not just definitions.
Where the Tier 2 boundary sits: which products and which advice RG 146 covers
ASIC's RG 146 sets minimum training standards for advisers. Under its Tier framework, Tier 2 products include general insurance, basic banking products and consumer credit insurance, and RG 146 continues to apply to people providing general or personal advice on them.
The professional standards reforms that commenced under the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 raised education and ethics requirements for advisers who give personal advice on 'relevant financial products'. General insurance products are expressly carved out of 'relevant financial products', so those reforms do not capture Tier 2 general insurance advice. Instead, RG 146 remains the applicable training framework for this space. Knowing why this carve-out exists helps you answer questions that contrast the Tier 2 pathway with the professional standards regime that applies to relevant providers.
The Tier 2 scope is narrower in product range but not trivial in content. RG 146 contemplates both general advice and personal advice on Tier 2 products, so the credential tests your grasp of the general advice regime in particular: advice that does not take the client's objectives, financial situation or needs into account. Compare this deliberately with Tier 1, where relevant financial products sit and where the professional standards regime attaches. Confusing the two tiers is a conceptual error worth eliminating early, because it changes which training and conduct framework applies to a given conversation.
| Feature | Tier 2 (this credential) | Tier 1 |
|---|---|---|
| Typical products | General insurance, basic banking products, consumer credit insurance, time-sharing schemes | Relevant financial products (e.g. many investment, superannuation and life insurance products) |
| Professional standards reforms | Do not apply to these products | Apply to relevant providers giving personal advice on relevant products |
| Governing training standard | RG 146 continues to apply | Replaced by the professional standards regime for relevant providers |
| Advice type tested here | General advice focus, with personal advice distinctions | Personal advice focus |
General advice versus personal advice: the classification decision that drives disclosure
General advice is information or an opinion about a financial product that does not consider the client's personal objectives, situation or needs. Personal advice does consider them. The classification determines which warnings and documents must accompany the conversation.
Classification is a factual judgement, not a label you choose for convenience. If a staff member explains how a home and contents product works and says nothing about the customer's circumstances, that can be general advice and must carry the general advice warning that the advice may not be appropriate. If the same staff member asks about the customer's house, belongings and budget and then recommends a sum insured, the interaction has moved toward personal advice, which attracts a different process. Practice making this call from a short dialogue transcript, because real conversations drift between the two.
The disclosure obligation attaches to the classification. A general advice conversation requires the warning that the advice was prepared without knowing your objectives, financial situation or needs, so consider whether it is right for you, along with appropriate disclosure documents. A personal advice process requires gathering client information and providing statements of advice under the applicable regime. Train yourself to identify the exact sentence that crosses the line. In study scenarios, underline the first client-specific fact the adviser uses; from that point, the interaction's classification and obligations change.
How general insurance products behave: indemnity value, agreed value, excess and cover triggers
General insurance covers contingent events such as accident, theft, fire or storm during the policy period. Core product mechanics include the cover trigger, the sum insured, indemnity versus agreed value settlement, and the excess deducted from claims.
Unlike life insurance, which responds to events concerning a person, general insurance responds to defined events affecting property, liability or specified risks. Motor, home and contents, travel, small business packs and consumer credit insurance all share a common skeleton: a policy period, defined events or exclusions, a basis of settlement, and an excess. Learn each product by walking through that skeleton. For example, home building cover is usually based on rebuilding cost, while contents cover is based on the value of items; a question that swaps these bases is testing whether you understand what is being insured, not just the product's name.
Settlement basis is a recurring comparison point. An indemnity-style policy pays what the property was worth at the time of loss, while an agreed-value arrangement fixes the payout amount in advance, often at higher premium. The excess shifts part of small losses back to the insured and discourages minor claims. Sub-limits cap particular benefit categories inside a broader sum insured. When reviewing any product summary, ask four questions: what triggers payment, what is excluded, how is the payout calculated, and what excess applies. Answering these four from memory is a strong sign your product layer is exam-ready.
Scenario one: the disclosure moment in a car insurance conversation
A client asks which motor policy suits them. The adviser references the client's specific car loan and driving habits while recommending comprehensive cover, but omits the general advice warning. That mixes tailored reasoning with the lighter general advice process.
Walk through the scenario. A customer at a branch says: 'I just financed a new car and drive to work daily on the motorway - should I get third party fire and theft or comprehensive?' The staff member answers: 'Comprehensive, definitely. With a new financed car and daily motorway driving, third party would leave you badly exposed.' The mistake here is subtle: the reasoning uses the customer's circumstances, yet no personal advice process has been run and no general advice warning was given. The conversation has been conducted as if it were tailored advice while the required disclosure for general advice was skipped entirely.
The better decision is to make one deliberate choice and execute it properly. Option one: keep it general - 'Comprehensive cover typically responds to damage to your own vehicle as well as others' property; this is general advice only and doesn't consider your objectives, financial situation or needs, so consider whether it suits you.' Option two: recognise the drift into personal advice and refer the customer into the licensee's personal advice process. Why it matters: the classification and the words used must match. An examiner can test this with a short dialogue and ask you to identify both the classification and the missing disclosure, so practise writing the corrected script, not just naming the error.
Scenario two: the duty of disclosure and how non-disclosure can defeat a claim
Insurance contracts rest on utmost good faith. Before entering, varying or renewing a policy, the applicant must answer the insurer's questions fully and honestly; misrepresentation or non-disclosure can let the insurer reduce or refuse a claim.
Walk through the second scenario. A customer buying home and contents insurance is asked whether they have made any claims in the past few years. They omit two recent burglary claims, saying to the adviser, 'It won't matter, insurers rarely check until something happens.' The adviser nods along. Months later, a storm damages the home; the insurer uncovers the omitted claims and reduces the payout. The mistake is the adviser silently endorsing a misleading statement about how insurance works. Even in a general advice role, giving an inaccurate picture of the duty of disclosure and its consequences is a conduct problem, not a harmless omission.
The better response is to explain the principle accurately without tailoring it: insurers rely on the answers given when deciding whether to accept the risk and on what terms; failure to answer the insurer's questions honestly can have consequences for the policy, including on claims, and the customer should answer the application questions fully. Why it matters: this scenario links the contract-principle layer to the ethics layer. Alongside the duty of disclosure and utmost good faith, review the related principles - indemnity (compensation aims to restore, not profit), proximate cause (the dominant effective cause of loss must be an insured event), contribution and subrogation. A short scenario can test any of these, so learn each principle as a one-sentence rule plus a one-line example.
Ethics, conflicts and knowing when to refer out: a rewriting exercise with a self-check rubric
Tier 2 general insurance distribution often involves sales incentives, which creates conflict-of-interest and conduct questions. The disciplined habit is to test every client interaction against the disclosure, accuracy and referral triggers before it happens.
Three ethical patterns recur in study scenarios. First, incentive-driven steering: recommending the product that pays the representative more without any client-benefit rationale. Second, overstating cover: describing a policy as covering 'everything you'll ever need' when exclusions apply. Third, scope creep: drifting from general advice into personal advice without the process to support it, as in scenario one. Each has the same discipline behind it - the advice given must be accurate, appropriately disclosed, and delivered within the process that matches its classification.
Practical exercise: write five short client dialogues, each under ten lines, drawn from motor, home, travel and consumer credit insurance settings. For each, mark where the classification changes, write the general advice warning in full, and flag any statement that misdescribes the duty of disclosure or the cover. Then score each rewrite against this rubric: (1) classification identified and stated, 0-2 points; (2) warning delivered accurately and at the right moment, 0-2 points; (3) no inaccurate claims about cover or disclosure consequences, 0-2 points; (4) referral suggested where client-specific recommendation occurred, 0-2 points; (5) language a real client would understand, 0-2 points. Aim for eight or more points across five dialogues before your practice exam, and revise any dialogue scoring under two on accuracy.
A preparation sequence and readiness checks you can actually complete
Sequence your study in four passes: framework first, products second, law and ethics third, integrated scenarios last. Finish when you can classify, disclose and explain contract principles from a cold dialogue without notes.
A realistic adaptable sequence: Pass one (framework, roughly two sessions) - read ASIC's RG 146 landing page and map Tier 1 versus Tier 2, the professional standards carve-out for general insurance, and where general advice sits. Pass two (products, two to three sessions) - for each major general insurance product class, write the four-question skeleton: trigger, exclusions, settlement basis, excess. Pass three (law and ethics, two sessions) - one page each for utmost good faith, duty of disclosure, indemnity, proximate cause, contribution and subrogation, each with a two-line example. Pass four (integration, at least two sessions) - full dialogue scenarios under time, using the rewriting exercise rubric from the previous section.
Readiness checks before sitting any assessment: you can recite the general advice warning accurately without notes; you can state, in one sentence each, the difference between indemnity value and agreed value, and between a sub-limit and an excess; you can read an eight-line client dialogue and correctly label the point where general advice becomes personal advice; you can explain two consequences of non-disclosure without overstating them; and you score eight or more on the five-dialogue rubric. If any check fails, return to the matching pass rather than rereading everything. Treat these as learning milestones, not predictions of any particular result, and confirm administrative details such as booking and eligibility directly with your licensee or training provider.
References and further reading
Use these references to explore the concepts and check the latest information from the relevant organizations.