The value of good risk advice

I think many of us in the life insurance sector have friends and relatives who wonder why we’re so fascinated with life insurance – the different types of cover, the underwriting and claims processes, the medical definitions. I’ve got to admit, from the outside it can all seem a bit dry.

But one of the great things about my job is getting to hear about some truly wonderful stories that illustrate the value of good cover and, most importantly, the value of good advice in making a huge difference to people’s lives.

Bev Ferris, principal of Sapphire Financial Services in Mackay, Queensland was asked to assist a client who had been involved in a serious motorcross accident.

In 2013, the client fell off his bike in a race and was about to remount when he was hit by another rider, causing serious long- term physical and brain injuries that require ongoing intensive rehabilitation.

Now in his forties, the client hasn’t worked since the accident and is unlikely to work again. His spouse, who hadn’t worked for 15 years, had to enter the workforce to support the family, and they were using savings and shares to meet their living expenses. It’s an understatement to say that life has been pretty tough for both the client and his family.

The client submitted a claim to their insurer MLC, but it was denied due to a motorcross exclusion placed on the total and permanent disablement cover and income protection policy. While the claim was denied, Bev was able to convince her client to retain the policy.

Three years after the accident and the initial claim, MLC introduced enhancements to their death cover in which the guaranteed policy upgrade was applied to these policies. Bev reviewed her client’s policy and became aware of the enhancements to her client’s death cover, in particular an extra benefit called a ‘specified injury benefit’.

Bev submitted a new claim under this enhanced benefit. She said the insurer was more than happy to receive it, work with her through the assessment process and pay out on it.

The outcome is that the client will now receive $2 million under this policy, thanks to Bev’s tenacity and the fair way the insurer dealt with it. The insurer paid for Bev’s work and worked with her to maximise the benefit to the family through the client’s super in which the policy was held.

Needless to say, this result will change the lives of Bev’s client and his family in a profound way. The money will help fund their living expenses and allow the client’s wife to move from full-time to part-time work.

When it comes to life insurance, there really is no substitute for good advice. It’s not just about putting the right policies in place, it’s about reviewing the client’s needs and objectives, and having a full understanding of the product and any new product enhancements as they are announced. This is why clients need an adviser.

There is a world of difference between properly underwritten policies with a reputable insurer and some of the direct policies and default policies available in employer superannuation.

With so much media focus on the need for reforms of adviser remuneration and criticism of the claims handling processes of some insurers, it was nice to be reminded again why we all work in this industry and what a great job we often do in helping people when they need it most.

David Spiteri is a life insurance specialist at Centrepoint Alliance