I Thought My Insurance Covered Me For That?

 

I would like to share with you a typical situation that I come across regularly working as a risk adviser in the industry.

There is nothing unusual about Mr & Mrs Jones.  Mr Jones is a self-employed electrician while Mrs Jones is a stay at home mum, primarily involved with maintaining the home & looking after the children.

Mr Jones had noticed over the last couple of months that health-wise something wasn’t right.  He booked an appointment in with his GP who referred him on to a specialist for further tests.

Unfortunately a malignant cancer was detected & even though it was still at its early stages, treatment was necessary.

The doctor confirmed that there was a very good chance that he would recover, however he would need to spend at least 3 or 4 months away from work during the treatment & recovery phase.

This news provided some reassurance medically; however their thoughts were now focused on their situation financially.

Being the sole income earner & realising that they only had savings to assist them for about a week or two, how would they meet their financial obligations?

Thankfully Mrs Jones remembered that her husband had taken out some personal insurance several years ago.  Mr Jones also recalled having some cover within his old super fund which was issued to him when he was an employee electrician.

They enthusiastically sorted through their policy documents & super member statements to confirm the details of Mr Jones’s cover.

Mr Jones had a life insurance policy that was organised through their bank when they applied for a loan for their current home.

After speaking with an adviser at their bank they were disappointed to discover that it was life insurance cover only, so Mr Jones did not qualify for a benefit on his diagnosis of cancer.

They now focused their attention on Mr Jones’s super fund.  His super fund was still active due to investment earnings on his accumulated balance.

They found his current member statement & were happy to discover that he had both life & Total & Permanent Disability (TPD) cover.

With this in mind they contacted Mr Jones’s super fund to find out what they needed to do to lodge a claim.  After a lengthy conversation discussing the details of Mr Jones’s diagnosis, they informed Mr Jones that he was not eligible for any benefits.

Why?  TPD insurance provides a lump sum payment if the insured is unable to ever work again due to illness or injury.

In almost every scenario cancer is seen as a temporary illness that will either lead to the insured returning to work at some stage or unfortunately cause death.

Did you know that Australia’s biggest killers are cancer & heart disease?

This means that your TPD cover is useless against these two events unless your condition affects your ability to ever work again!

Life & TPD cover are the two most common forms of insurance held within superannuation offering financial protection against death & permanent disability.

Statistically speaking, death & permanent disability are less likely to occur than temporary illness or injury!  Was it Mr & Mrs Jones’s fault that they didn’t understand the details of their cover?  Probably not!

Should they have asked a few more questions or approached a qualified adviser to ensure that their personal insurance was in order?  Yes!

This scenario has been taken from many real life situations that I have come across in the industry.  The only way that we can avoid or reduce financial stress caused by illness, injury or premature death is through proper advice!

Had Mr & Mrs Jones sought advice in this area they would have understood the details of TPD insurance.  Their adviser would have raised the topic of trauma insurance & explained the importance & value in having adequate cover in place!

As Australian’s we need to show some initiative & become a little more pro active if we are serious about solving the under-insurance problem & therefore protecting ourselves financially!

Do what you can now & make it happen!

 

 

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Tom George
My role as a Life Risk Adviser involves educating, assisting and providing advice in the area of personal insurance. Follow me on Twitter | Linked In Profile

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