A Real Strategem Insurance Case Study with Adam Middlemis
Often the value of good financial advice is difficult to grasp for those who choose to go it alone or those who fail to find a planner possessing the appropriate knowledge, with attention to detail. Adam Middlemis believes the following true-life client case demonstrates the value a financial planner can bring to a client.
*please note this particular scenario dates back to 2013.
The client scenario David (not his real name), aged 60, approached us with regards to his personal insurance needs. He had several existing insurance policies that were taken out in the late 1990s with another financial adviser and he was unsure if these policies were still required. The policies included an AMP Crisis Care plan (Trauma), two AMP Life and TPD policies, and an AMP Business Expense policy. The total premiums payable were approximately $20,000 per annum, with the Crisis Care plan accounting for $12,000 per annum of this cost.
During our initial meeting, we completed a detailed fact find to determine David’s insurance needs. As part of this process, we touched on David’s current and past medical history. David advised us that in 2006 he had triple coronary bypass surgery.
Considerations and thinking
It was immediately obvious to us that David may in fact be entitled to make a claim on his previous heart surgery. We also considered that this may not have been previously claimed due to a policy exclusion or perhaps not meeting the policy definitions. We wanted to ensure that this matter was fully investigated, but at no time did we want David to think that he would definitely receive a successful claim payment. We discussed with David that this type of surgery was a condition that he would normally be able to claim through his Crisis insurance.
David explained that at the time of the illness and surgery, he had not been in contact with his previous financial planner nor had he considered making a claim, as he was not fully aware of the policy conditions. He felt that to claim on any policy, he needed to be disabled long-term. He had considered making a claim on his business expenses insurance, however, he had not bothered due to only being off work for six weeks. David confirmed that he had no recollection of there being any specific exclusions on his Crisis Care policy. We suggested to David that it was worth completing some additional investigations to see if he could possibly make a claim. We obtained further details on his surgery and received David’s written permission to contact AMP to discuss his policy in more detail.
The claims process
We emailed the signed client authority and contacted the AMP claims team. They advised that the triple bypass surgery was a condition that could be claimed and that even though the surgery was seven years ago, the claim was still valid. AMP promptly contacted David to confirm some details and then emailed the claim forms. David attended our office so that we could assist him to complete the claim forms. We again reminded him that this was not a guarantee of the claim being accepted, but it was certainly worth submitting the claim. David made an appointment with his heart specialist, who was required to partially complete the claim forms.
Within a few weeks, the forms were fully completed and lodged with AMP. We kept in constant contact with the AMP claims assessor and within two weeks of the forms being lodged, the claim was approved.
During this time, we had also completed some further fact-finding with David to try and determine the Crisis Care sum insured at the time of his heart surgery in 2006. During these discussions, David advised that he also had an Income Protection policy with AMP but this was cancelled in 2008 several years after the heart surgery. He advised us that he had cancelled the policy as he no longer felt it was needed. We contacted the AMP claims assessor to discuss this Income Protection policy in more detail. Specifically, we wanted to know if this policy contained a critical illness benefit.
AMP confirmed that this policy was an ‘advanced’ policy type and did, in fact, have a critical illness condition. Even though the policy was cancelled in 2008, a valid claim was still possible as the policy was in force at the time of the heart surgery. As it was an additional benefit under the ‘advanced’ policy type, this payment would be made regardless of whether David was working or not and regardless of his income at the time. This additional income protection claim was added to the existing crisis claim with no additional paperwork required.
The claim payment
Approximately two weeks after the fully completed claim form was lodged, AMP contacted us to advise that the Crisis Care and Income Protection claims had been accepted and would be paid within the next few days.
The total payment was $207,297 and comprised of the following:
A Crisis Care payment of $122,660. This was the sum insured in 2006.
A refund of the Crisis Care premiums paid since 2006. This totaled $55,598.
An Income Protection benefi t of $27,330, which represented six months of the monthly sum insured of $4,555.
David also received a refund of $1,709 for the Income Protection premiums paid over the six-month claim period.
Upon finding out that the claim was approved and would soon be paid, I visited David at his office to deliver him the good news. David was very pleased to learn that the claim had been approved. The additional refund of premiums and Income Protection benefit also came as a great surprise.
Soon after the claim, AMP advised that the Crisis Care policy contained a buy-back benefit for Life cover. This would allow David to buy back the Life cover component of the cover over the next four years. As David no longer required the Life component of this policy (determined via an additional fact find and relayed to him in a Statement of Advice), it was allowed to lapse. There was no reinstatement policy condition that would have allowed David to reinstate the Crisis cover.
Summary
As a result of our specialist knowledge and advice, David was able make a claim on his Crisis Care and Income Protection insurance policies and receive a substantial payment. Without our assistance, these claims would likely have never been made. Not only would he have not received the benefit that he was rightly entitled to, he would have continued to pay the premiums of $1,000 per month on his Crisis Care policy.
David was invoiced for our professional time on a fee-for-service basis for our assistance in reviewing his insurance needs and assisting him with the insurance claim process.
Our aim is to provide specialist advice to clients through each step of the insurance process. This ranges from reviewing clients’ insurance needs and getting the right cover in place, to assisting them through the claims process.
We are here to help
If you need further advice on this topic, please do not hesitate to contact our office on (03) 5445 4777 and one of our Accountants or Advisors will be available to support you.
