They are a professional couple with young kids who worked hard to build up a reasonable asset base but they still have a fair level of commitment ahead of them. He is mid 40s and kids are aged from 10-12. He’s an IT professional and she’s a qualified Accountant working in a start-up business and he works for a large corporate.
They had their own Superannuation fund and unknowingly when he closed his Super accounts, he lost all his insurance. He thought he still had cover and recently realised he didn’t. She does have cover and was keen to get something established to him.
What insurance did they have prior to Trumpet and how did they come to Trumpet?
They were referred by a mutual friend and a client of Trumpet. Prior to meeting us, he had had comprehensive insurance as did she. Hers was still current but his had lapsed. So, we went through a process of analysing their requirements and making recommendations for cover.
As part of that process, we investigated whether there was any health issue that may prevent him from obtaining certain types of cover. Apart from a broken foot some three years ago, he really didn’t have any health issues.
In terms of the advice we gave them compared to what they have, what did we recommend for them?
We recommended comprehensive insurance to include Income Protection, Life, TPD & Trauma. The amounts we recommended was quite different to what they had and that we feel the Trauma was more important than TPD and therefore put a bit more emphasis on that.
For her, she had an Indemnity Income Protection policy and given she’s in a start-up and had no real income coming from the business for the last couple of years, if she was to make a claim, she would not be paid anything and the previous advisor did not make her aware of that.
In event of a claim, Indemnity Income Protection only pays 75% of your income over the last year or two, even if you’re insured for like she was $11K per month, that’s no longer relevant because she hadn’t earned any money, even though she was spending $4K or $5K a year on the policy.
What happened that made them sort of question their insurance made us talk to them about a claim?
We inquired as to what Income Protection he had three years ago when he broke his foot and he advised he presumed he had the same cover as his wife. We explained that her cover is a comprehensive cover and that it includes a specific injury benefit which doesn’t require you to cease work to make a claim. He was most surprised to hear that, so we investigated that
He had a policy in place at that time.
It was one that included a specific injury benefit.
One we confirmed that it did satisfy both those items, we then organised to lodge a claim and obtained the evidence from him of his fractured foot, he was then paid $28K from the insurance company on a policy that had been lapsed for more than two years.
What was his reaction to that?
He was most pleased given
He didn’t know that he could make a claim.
The break in his foot had seriously impacted his recreational activity of snow skating for that season so some compensation for missing out on months of snow skating.
Any lasting impacts on their insurance? Are they some sort of back to business as usual or what are they up to now?
Now they have both got the appropriate cover for their circumstance and it’s also a much more competitive premium than when we met them.
What do you think is the lesson learned from this?
Most of clients don’t have a full understanding of their insurance and let it drift and not review it in time. They should review it every two or three years to ensure it still matches their current circumstances.