It’s at claim time that you really find out whether your insurance policy works the way you wanted it to and whether you’ve had the best advice. Unfortunately claim time usually happens as the result of a traumatic and emotionally draining event or series of events. Insurance should be a comfort to you at this time, not a source of more difficulties.
In my fifteen years as a Life Insurance Adviser I have helped many clients through claims and over the coming months I will share a few cases which have learnings that may help others. Obviously I have changed any identifying details as privacy is paramount.
John & Sally
John and Sally were referred to me through another client ten years ago. They had recently returned to New Zealand from overseas. They were hoping to raise their children in the classic kiwi lifestyle; they had purchased a home with a substantial mortgage and John had started a new business.
I worked through our process with them and we established Life, Trauma and Income Protection for John, Life and Trauma Cover for Sally, and Hospital and Specialist Health insurance for the whole family. Each following year we met over a coffee and reviewed the cover, making sure it was appropriate and implementing minor adjustments as needed.
After knowing them for six years I received a phone from Sally saying John had had stomach pains, was currently in hospital, and had been diagnosed with an aggressive cancer. They were both upset and stressed not knowing the full prognosis yet, although they had been told he would need further surgery and would need to go on the hospital waiting list.
As per our usual process, we immediately contacted their Health insurance provider and activated their cover to enable the surgery needed to take place privately. The surgery was able to be completed within 10 days.
Sadly John’s prognosis was not good. He immediately commenced chemotherapy in the hope it would give him more time.
As you can imagine at this time the stress levels for both John and Sally were extreme, not only with worrying about John’s health but also the worry over the family’s immediate and future financial position. John’s business would not run and generate income without him on hand and in charge.
Our next step was to claim his Trauma Cover meaning an immediate lump sum of cash was banked in their account, allowing them some financial breathing space from their expenses. We concurrently activated his Income Protection claim. After the wait period this began to pay 75% of John’s income, meaning they could cover their living expenses longer term, including their mortgage repayments which would ensure the family home was secure while John was fighting his illness.
Unfortunately there are many people in John’s situation having to try and work and hold on to the family home whilst also completing chemotherapy and coming to terms with a terminal diagnosis.
Sadly John did pass away around two years after he was diagnosed. Nothing could lessen the devastating impact of this for Sally and the kids, however Sally commented that they had many days of quality family time over the two years, creating significant memories together, days which they did not think would have happened if they had both remained emotionally tied in knots over the financial future of the family.
John knew that the insurance claims he had already been paid, combined with his Life Cover, would mean his family would be financially secure, and this was a source of relief to him.
Too many families are not protected adequately from the harm that is a consequence of an illness befalling the family’s main income earners. Consider just how much is riding on your ability to earn an income. Your family home, your children’s education, their ability to pay expenses, the family’s quality of life – and as in John’s case potentially your own ability to live your final months or years the way you would choose to.
Insurance is more than just a sum of money that gets paid out when someone dies. It’s a way to financially help your family get through a very difficult situation – as in this case, from needing surgery to immediately funding mortgage repayments to covering lost income over the course of an illness – and only finally to paying a lump sum at the time of a death.
I would urge you all to review your situation and your family’s needs with an insurance adviser, making sure you are making informed decisions about what you will be and won’t be covered for. Would you receive a trauma pay out in this kind of situation? Would you have income protection that kicked in after a number of weeks unable to work?
If you don’t have an adviser you trust to discuss this with, and if I can help, just let me know.