Episode 6 | Why Personal Insurance is Key to Financial Security | Interview with Adam Middlemis | Enriched Wealth Podcast

12 Dec

In this episode of the Enriched Wealth Podcast, Kris Tatt sits down with Adam Middlemis, Financial Advisor and Insurance Specialist, to break down why personal insurance is a game-changer in protecting your financial future.

Adam dives deep into Life Insurance, Trauma Insurance, and Income Protection, explaining how these essential tools can provide peace of mind and financial stability when life takes unexpected turns. Whether you're navigating the complexities of superannuation or figuring out if income protection is right for you, this episode will arm you with the knowledge to make informed decisions for yourself and your family.

Tune in for practical advice and real-world examples on how personal insurance is not just a safety net—it's a cornerstone of a strong financial plan. You won't want to miss these must-know tips for securing your wealth and well-being!

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Transcript

Kris Tatt

All right.

Well, welcome to the Enriched Wealth Podcast.

Today we have Adam joining us.

Adam, thank you for coming on today.

I wanted to get you on as one of our first guests because I think you've got a interesting role at Stratagem.

We've got a very interesting set of skills, unlike our other advisers, not saying they don't have an interesting set of skills as well, but yours is very particular in terms of what what you do and how you help clients.

So I want to get you on to talk a bit about that today.

But I want to start with a question, What got you into financial planning?

What drew you to the idea of financial planning as a a career?

Adam Middlemis

Yeah, I've always been interested in in numbers, you know, not to the point where I sort of did accounting at school, though I had a bit of a different interest at school.

I was looking at sciences and and at university sciences, but working through some years just out in the hospitality industry, talked to a few people, talked to a few people, actually worked as financial planners and realised that's what I wanted to do to sort of help people in that financial space.

Yeah.

Excellent.

So that was a time when I was in Melbourne at the time and wanted to come back to Bendigo.

So raise a family, buy a house.

So did that, started off an internship if you will, I suppose.

20 odd years ago now I suppose, yeah.

Kris Tatt

So long time in the industry, we've seen a lot of changes.

Adam Middlemis

Yeah, yeah.

So I came in when there was some superannuation rules which I studied and then they were quickly thrown out.

So we studied some some new rules.

Yep.

And that's kind of A to see ever changing landscape ever since I suppose and while we're continually studying, I guess.

Kris Tatt

Yeah.

And you've sort of gone down the path of insurance specialist, especially at Stratagem, you are the insurance guy.

So what sort of drew you to the insurance side of it because it is it is different to the other areas of financial planning?

Adam Middlemis

Yeah, insurance I suppose is pretty straightforward in nature.

You have an incident, then you you make a claim and get some money.

But the details in the background of the definitions and the products and the yeah, the, the, the coverage that you can get basic, comprehensive, all that sort of stuff.

Why I did it, I suppose at the time building my knowledge through stratagem, I was encouraged to find a niche, sort of differentiate myself from others as we do have a different skill sets.

Nobody really was taking on that insurance side of things.

So I was encouraged and supported to to do some additional study.

They what they call the risk insurance specialist.

Yeah, yeah, yeah, of course, I think and did that and then sort of took off from there and building the the client book through through referrals in inside and outside of the stratum.

Kris Tatt

Yeah, great.

And when we talk about insurance, just want to clarify because different people have very different ideas.

It's not, it's not the car insurance or the house insurance, is it?

So what, what types of insurance are you specifically dealing with because it's all all quite niche depending on what areas.

So what are you, what are you really sort of getting involved in with their insurance?

Adam Middlemis

We call it personal insurance, I suppose.

So insuring the person general insurance you're referring to there, the car contents, house professional indemnity, professional liability, all that sort of stuff is a different speciality and different skill set that that we don't have.

We're not licenced in that.

So we look at the the personal side of things primarily life insurance, you pass away.

Yep, TPD insurance if you're totally disabled and can't work ever again.

Trauma insurance if you have a a certain traumatic, well, a medical event, yes, cancer, heart attack, stroke type thing like give you a lump sum of money to get through that or income protection is effectively ensuring your ability to can to earn a living to get paid.

Private health is another one in there that sort of people talk through.

We don't we're not licenced to sell private health insurance either.

Yep, sometimes people sort of think that private health is a replacement for income protection.

Kris Tatt

Yes.

And, and I have had those conversations with people and have have sort of tried to help them.

So if I, if I, if I have private health and I don't have income protection, what, what does private health give me that?

Let's just sort of unpack that a little bit.

Adam Middlemis

So private health, I suppose you pay effectively for the ability to see a doctor of your choosing and the speciality of your choosing in a, in a hospital of your choosing.

If, if something untoward happened.

Now that's getting you in front of the specialist, unfortunately, that specialist will then charge you.

Yep, but it's getting you the specialised care that you want with a specialised kind practitioner in that space.

And, and often a lot quicker too.

If you, if you don't have private health, you might have a, a very long waiting period to get into a public system.

So the private health gets you in the door a bit quicker and with the right person.

Yep.

Income protection, however, is very, very different.

Different nothing to do with this hospital stay.

It's effectively giving you some income to continue to live, to continue to meet your expenses.

If you can't work due to accident or illness, so you.

Kris Tatt

And I guess people don't know what to think about that do that because they're sort of thinking about if I'm sick, making sure I get cared for, but what actually happens because I might not have income coming in, I might not have sick leave.

Some people have sick leave saved up, but other people don't.

And so it's sort of saying, well, what what happens there?

And that's.

Adam Middlemis

That's that's right.

So I suppose the self employed incredibly important.

If there's no money coming through, we need that replacement of income.

If it's six months, 12 months off work, how does that income continue to come?

A lot of people when their when their employees seek the sick leaves enough and that that's probably good for the first month.

Maybe if you've been there a while after that, probably.

Kris Tatt

Better for minor events though, would you think?

Yeah, and not.

Adam Middlemis

And that's what income protection design for that longer term event anyway.

It's not I've got a week off with a cold.

It's it's I've had a month off and I'm, I'm, I'm off for sort of several months or longer.

So support, bring someone for years off work is where it comes in.

And we're replacing hundreds of thousands of dollars worth of income.

So yeah.

Kris Tatt

Which I think, I think sometimes two people can look at the cost of insurance and not, not that it's always expensive, but sometimes they look at the cost and go, do I need that?

But they're happy to insure the car or something else.

And I that's right.

And I'll sit there and think your ability to earn is much greater than than even covering the, the car.

Not saying you shouldn't have car insurance, just so saying no.

Adam Middlemis

That's yeah, it might be $2000 to insure the family car, which is worth 50, and it might be $2000 to insure the person's ability to earn an income for the next 30 years sort of thing.

So yes, it's a very different result.

We have people say that the car and they'll insure it, but they sometimes won't insure themselves just.

And yeah, that's an estimated cost, but everyone's the costs are based on your, your age, your health, your sex, what job you're in.

Another thing just quickly too, the a lot of people fall back on and say, hey, work covers there.

If I, if I'm injured, I'm at work, I'll be on work cover.

That's that's true.

But you fall off the roof at home when you're cleaning the the gutters have that cancer, have that heart attack, have car accident, might be a bit of tac, but primarily there's a lot of things that we say that people are off work.

It's nothing to do with work cover.

It's nothing to do with tac.

They just are unwell.

Kris Tatt

So let's use TSA as an example because I've heard that one as well.

If I have a car accident, TSA covers me.

But they don't necessarily cover you for everything.

They don't cover you the whole time.

Do that and it's not.

This is nothing against TAC if they're listening, but it's sort of saying that we can't always just rely on the default position, can we for things?

Adam Middlemis

No, that's it's, it's actually a very difficult thing to sort of quantify and research and work out.

If I had this accident and I was off work for a period of time, how much money will I get?

It's, it's something I've tried to do before and it's, it's really hard to work out what you would get.

Yes, there's some replacement of income, but typically it's depending on the level of severity of disability and all sorts of things.

Yes, and it and it doesn't go for very long either.

I don't, I don't think so.

It's yeah, the income protection, it can pay right up to age 65, replace 70% of your income.

Yep, up to that point.

So it's a long term.

If you're 25 years old, there's 40 years worth of income if if you can't return to work.

And that's that's a big number if you.

Kris Tatt

It is, yeah.

And I think PE people don't always think about that long term impact.

And, and if I can't work for the next 20 years, what does that mean?

How does that impact retirement and, and all those things as well too?

Let's let's, I want to talk some client examples because you have obviously seen a lot of examples and, and things over the years.

What's what, what, what stands out to you is one of those things where you're really able to help a client in a tough situation and sort of just just just just so people can understand some of the details and how you've sort of actually helped them.

Because I think sometimes we, we can focus on making sure that we're covering for the worst.

But the worst does happen more than people realise, I think.

And So what?

Yeah.

Adam Middlemis

Yeah.

So as you mentioned, we're, we're there to to help clients claim, make them understand what they can claim, what put it out there of what, what's a possible claim and help them submit that a bit of paperwork involved and we'll take them through that as part of our service to them.

So unfortunately, as probably other people are experiencing a lot of cancers, cancer is a bigger climb that I'm saying at the moment, or sort of sort of broken bones and such.

So shoulders or, or things that might stop someone for, for a few weeks.

But yeah, that, that cancer can form part of a, a trauma insurance payout.

Yep.

So that trauma insurance is, is payable on a specified medical event.

So there's about 40 conditions, have a heart attack to a certain degree, cancer, stroke, paraplegic, Parkinson's, dementia, motor neurone, all that sort of stuff there.

There's horrible illnesses that can result in a trauma payment, which is a sum of money designed to sort of take you through that six month period.

Now income protection can kick in as well, but this trauma insurance is a, is a, a bigger lump sum.

There's a few ways to help you calculate that we can take you through that process.

But say it's one or two $100,000 tax free.

It's money for that person to take time off work.

There's no actual requirement to be off work.

So you might actually, I've had a few people claim on cancer and they're actually still working.

They're they're self employed and they might return on and off or they, they're always on the phone or such or, or what have you.

But This is Money to allow them the time off work to start with if they want it, take the pressure off that line, allow the spouse time off as well.

And that's a bigger one that that spouse probably wants to stop work straight away.

I see people diagnosed one week and then they're in hospital receiving chemo the next week.

So we can get these, the trauma payments are generally processed a little bit quicker with the, the way they're designed to just pay on illness.

So if we can prove that illness, so we get them the money pretty quick, they've got that money if they're sitting in the bank, It's just that financial security.

But I have, I've had clients sort of got into Melbourne, their their spouse travels back and forth.

There's transport costs, there's accommodation costs for that spouse, there's childcare costs that they incur at home.

Stresses without both people now out of work perhaps, yeah, maybe a little bit sick leave, but that.

Kris Tatt

There is a lot of pressure on the family, isn't there?

And I think sometimes, and I think for me, like, so just not for Full disclosure, Adams looked after mine and my wife's insurance as well.

And for us, it was always thinking about what happens to the other person as much as ourselves.

And sometimes we can just think, oh, it'll be right.

But if something happens, then, then the then the spouse gets involved as well too.

And that's and there can be a lot of extra work for them as well that that just isn't always considered in this.

Yep.

Adam Middlemis

And that's, that's a big thing actually.

Sometimes they might be a high earning professional and their spouse doesn't work.

They're they're, they're taking the family role.

A lot of people sort of insure the the high earning individual and not their spouse.

And that's, that's a bit of a mistake.

If that spouse becomes unwell, they need to drop everything just as much as the high earning person would say that the person in the in the job has to be off work.

So we need that money just as as much as if, as if that person was working.

So, yeah, travelling to Melbourne, travelling to specialist appointments, paying for specialist treatment, if you can get it, medication, all that sort of stuff.

It just helps take the the pressure off and, and we've saved some real good, really good examples of that and insurance companies coming to the party very, very quickly on that.

Kris Tatt

Yeah, I think it's in a couple of days usually, isn't it with a?

Adam Middlemis

Yeah, if we have that the evidence and the doctor's reports, there's a few reports obviously we have to get yes, but yeah, I've seen them done in a couple of days to where we've submitted that full lot of information, evidence of that cancer being at that required level.

And yeah, and this isn't just a cancer that your terminal, this is a cancer that more often than not you're expected to recover from.

But yeah, if you're having six months off work or three months of treatment, you just need that money to to help to get you through.

Kris Tatt

Yeah, and and it and correct me if I'm wrong, but I would say for a lot of Australians can't cancer, stroke and heart attack, probably the the big three that we actually see people off work for, isn't it?

It's not usually a it's, it's sometimes it's not a car accident and it's not this somatic.

It's it is those health, health things that really impact people's ability.

Adam Middlemis

Yeah, For me, the leading cause of claims I've seen the heart attack and cancers, a lot of cancers, a lot of variety of cancers, some other pretty terrible illnesses out there that we've we've seen people claim on.

Mental health is also a leading cause of claim with insurance companies.

So people having that time off work to, to recover mentally.

Now unfortunately that's not a trauma event.

So it's not a, as far as an illness that you can provide evidence of with pathology that's normally linked to that trauma insurance top payout.

But Yep, certainly income protection gets in there.

I've got a few people on claim 2 that I can think of immediately off my head, sort of quite high earning professionals that have been off one for probably 3-4 years and the other one probably going on 6 months of, yeah, mental health concerns that they really can't work in that role right now.

So the income protections kicked in and, and supporting them.

And that's, that's absolutely the number that there's no, the sick leaves run out.

One was self employed anyway.

There's certainly no government benefits that come anywhere near the the level of cover these people having.

We're talking, yeah, a large number each month that they're getting that they need to support their their cost.

I mean, you sort of you have debts, you have school fees, you have everything.

You don't expect to be able to, to not work and, and generate that.

But those people are falling back on the insurance and it's really, really helping them.

Yeah.

Kris Tatt

Which I think is it's great that we can help them with that.

One of the, one of the things that I hear a bit and I'd love to hear your thoughts on it.

A lot of people have super and they usually have a, a bit of insurance and super.

It might be a bit of income protection.

It might be a bit of life and TPD.

And, and so often I'll hear them say, Oh, my super's got that.

What's what's some of the, what's some of the things I need to be wary of when they, when they think that super's going to cover them because I have, I like I, I knew I had something to, but it definitely wasn't enough.

And it and it to get it out was was a lot harder as well too than I thought so.

Adam Middlemis

We do still structure things in super.

We've got some tricks where we can get some good product and put it half in super, have it paid for by super.

From a cash flow, cash flow perspective, Yep.

I suppose when somebody comes me and says, hey, that's it's in my super, I'm fine.

The first thing is let's just have a look at it and see what it is.

And unfortunately it's well, the good thing is it's default cover.

So everyone typically gets it.

There's a few age requirements around that now, but typically if you join a Superfund and you're working, you'll get some default cover with no questions asked.

So it's better than nothing is what I sort of start off with.

And then you look at the level of cover.

So yeah, sometimes it's only $200,000 and.

Kris Tatt

Which which sounds like a lot of money, but in this day and age with mortgages and, and the fact that it's got a fund, like I know the, the question for us was it, it's not just to think about the mortgage, but to think about what are the other costs that that if you were not earning that money would still be there.

Adam Middlemis

So the kids, kids, education's a massive 1.

So we go through the needs analysis, help someone work out what they need.

And, and more often than not, it's not 200.

It could be one and a half million, yeah, Mortgage could be only 1/3 of that, yes.

The rest is whether it's, yeah, education costs, you had some intention to put your kids through a private school or even a public school or Catholic schools are still relatively pricey money for that for the spouse, the surviving spouse.

Also, I suppose a bigger one is, is, is that surviving spouse?

Do you want them to return to work?

Do you want your your spouse who wasn't working or perhaps working part time or or working full time, Are they going to be able to go back to work and earn any money to live?

So I think everyone knows nowadays with even without the mortgage is gone, we've paid for the child's education.

We're still looking at a lot of money that we need each week to live.

So we, we designed the cover so we can have a, a lump sum to get out, get rid of that mortgage, put some money aside for the kids education, and yet put some money aside to invest and draw upon like it was a salary at that person's need.

So we go through help that person sort of determine their need for if you were to pass away or if your spouse was to pass away, what does that mean for you?

Because some people can't return to their work in that same capacity.

If your spouse died, what do you do?

Can you continue to work 60 hours a week sort of thing?

Well, you've got 4 kids at home.

Yep, probably not.

You need to either pay for a nanny, pay for childcare.

Some people fall back on family, but I'm not too.

It's a hard one, that one you.

Yeah, people get parents get older and they want to have holidays.

So yes, you need some money to.

You'd either drop back your hours or pay for someone else to pick up.

Kris Tatt

To help support.

Adam Middlemis

Pick up there cleaners.

It's it turns out to be a very large number.

So I digress a little bit there.

The superannuation cover.

Kris Tatt

No, no, that's good.

Good discussion though.

But yeah, I think it's just, I think sometimes we can if we don't know the numbers.

And this is, this is what I just say more and more is if you don't know the numbers, the numbers probably aren't right.

And if you do those numbers, then then you're probably able to sleep better at night knowing that if something happens, you're covered or your spouse is covered as well too.

And I think if one is in a in, in, in that good, good occupation doesn't mean the other spouse can jump into a similar occupation and replace that income either.

So there's, there is, it's just thinking through it as a family unit, I think, which is one of the big things on, on the you've mentioned a few medical terms.

I feel like you're probably our quasi medical expert at stratagem as well too, because you, you see a lot of medical things and not that we need to get into all the specifics, but you probably have the most, you're probably almost, you've probably almost got a minor in a medical degree.

I feel sometimes with, with some of the stuff that in terminology and things like that.

So you, you have to, you have to be quite aware of the medical side of things as well too.

It's not just understanding someones finance side and saying this makes sense.

It's, it's all the other side as well.

So can you talk through a bit of some of the things that you see that or questions?

I know I had to do some blood work.

I, I had some questions about a, a couple of things that I had from years ago.

So what what are some of the the things that you say or that you have to get involved with on the medical side as well?

Adam Middlemis

So there's two spot 2 aspects of it, I suppose there's the application process, where to get this cover.

The insurer wants to understand your risk.

So they go through and they sort of say, hey, have you ever had?

And there's a series of questions.

Not everyone has to have blood tests.

Depends on your age, Yep.

Perhaps your medical history or perhaps the level of cover you're applying for.

But they do ask the questions, they want to know what sort of risk you pose.

So we see some stuff there.

Now, I'm not an underwriter, but I, that's the person who assesses the, the policy and the risk.

But I guess we've had the experience of sort of saying, hey, if you had this history, perhaps they're going to look at this or they're going to want some more information.

Or perhaps sometimes they can't cover a particular condition depending on how frequent or recent it was.

So we, we can sort of give people a bit of a thought process there of, hey, perhaps, Yep, you've got some cover in your suit, but maybe hang on to that while we, while we top it up with something else out here that it's better definitions, but hang on to that one because you've got full coverage where there might be a new condition.

And, and yeah, I'm not making that final decision at all, but can certainly take people through that and help them understand.

I suppose as we're going what we're, what we're looking at.

The other side of the coin is claims time.

So again, I'm not, I'm not a claims assessor, but we can sort of get a feel for what people might be able to claim on it.

And trauma insurance is again, a bigger 1.

So somebody trauma to get that full benefit and it could be one or two $100,000, you typically have to be at a cancer that's relatively serious.

Yes.

What people forget that at times is that they do offer partial benefits where they may provide a 10% amount of the cover.

And it's, it's think Melanoma has, has been a big one for me.

So a Melanoma to a certain level, most of the time a doctor can remove it.

You could be under observation for a while and perhaps there's no more further treatment.

So it's, I guess it's on the lower end of it can be quite serious too, by the way.

But yes, on that lower end Melanoma from a doctor's point of view, it's, it's hopefully something that you'll continue on.

Now that's not a full trauma payment, but a lot of people don't understand that's actually a partial trauma payment if it's at the same thing.

So about a year ago I had three over the space of about six months where I sort of, I have the review with people chat about their cover, chat about their needs, but also chat about what's changed in their health and, or was anything changed?

And I said, Oh yeah, no, I had this thing removed.

No worries.

And yeah, I've actually retrospectively did about 3 climbs and I reckon it was about six months that I saw three of them.

And it's sort of reminding people what they can climb and, and insurance companies don't mind that.

They like to be told relatively quickly, but at the same time they don't mind retrospective stuff if Yep, if if someone wasn't aware of it or another thick of an illness.

So we've had another guy who who missed an opportunity to climb with a heart valve replacement.

He he wasn't aware, not valve replacement.

Sorry, a bypass surgery.

Yes, he wasn't aware that he thought he had to be off work.

So there's no off work requirements for trauma.

So he, he did it in a year and a half went by and we were able to backdate a climb for him for a year and a half ago.

And, and I've seen some others, one other one that was far longer than that too.

So that was a, that was a very special case where we went back about nine years.

Wow, where the client wasn't aware.

So this is, these are clients at heart that weren't our, our insurance clients.

So sometimes they sort of come to us with a policy and they say, hey, can you help me out here?

Kris Tatt

Obviously it's a lot easier if they've got the policy with you because you're able to have more regular conversations with them, but.

Adam Middlemis

So we can become the advisor on the policy where I can see all those details online, see what sort of policy it is.

Definitions do change over time.

But yeah, also contact that insurance company readily if I need to, to ask some questions.

But we'll, we'll send out and encourage people to review the policy and their needs annually.

And as I said, that could be a do you need more cover?

Do you need less cover?

Yes.

Had a promotion, had another baby, all that sort of stuff that changes those life events where we need to to look at it.

But also, yeah, has there been any changes to your health?

Yeah, We don't often go in there trying to replace cover to to do a better deal.

We're not sort of chopping and changing every year.

This is cover that, as I said, you go through an application process.

So there's sometimes there's there's reason to change, sometimes there's plenty of reasons to not change.

So yes.

Kris Tatt

And I think that was one thing you mentioned earlier, which I wanted to touch on quickly, was you said they might have some default covering super and we might leave that there.

Sometimes two people can look at, you know, it's costing me this or I could easily save some money by not paying that, not realising that in one or two years time they might not be able to get that same cover as well.

So there there can be risks around cancelling just without understanding the impacts as well, isn't there?

Adam Middlemis

Yeah.

So if obviously, if somebody's rolling over super funds, consolidating super funds, that's a big danger there.

Yes, it's great to save on fees if you can and have all super in one spot.

But quite often it's missed that you may have cover here, here and here.

And sometimes it's cover they don't need, but a review, a review first of do you need this cover?

Can we consolidate the cover as well before anything's done?

Because as you said, you roll that and that and that into this fund.

Perhaps this fund doesn't even have insurance and you've just cancelled all your other insurance.

Now you come to me and say, hey, I need some insurance.

And unfortunately, I've had a few people who have had some serious medical events in the past and they sort of they then see the importance of cheaper, I need insurance.

Unfortunately, if that point has come, sometimes they can't get it if, if they've had some really serious illnesses.

Or I've seen some really strong family history sort of tighten up on, on cover as well, where there might be a very strong history of breast cancer in a family where all sisters and mothers, mother and everyone and, and perhaps a person here wants some cover, but perhaps they can't get it.

So it's sort of the earlier we can get it before any of these conditions or, or get them in when they're younger and healthy.

It's cheap when you're young.

The insurance company, importantly, this is, this is a big point.

I, I say to people is an insurance company can't change the terms of a policy.

This is the retail stuff.

Unfortunately, some of the default super funds can change terms, but some so the, the stuff that we'll, we'll recommend to a client, they can't change the terms of the policy.

They can't.

Kris Tatt

I think that was one of the things you said to me is you can sort of go out and put on 30 kilos if you want and you've, you've still got all the same terms that you had back then.

So that's right.

Not, not that I was wanting to, but it's sort of there.

There's a bit of reassurance that you don't have to try and maintain that same lost all you did.

Or if there is an event that changes it, like having kids or having to change jobs and you, you end up in a job where you you can't maintain that lost all you once had, you you're still able to maintain that cover at that level that you had and.

Adam Middlemis

And the big part there is if if you claim on your car insurance a couple of times 17, the next next renewal, they'll put up the price and they might not even offer you insurance.

They might say, hey, you're too, too risky.

This personal insurance we have, they legally have to offer you the same cover at the same cost.

So my example of the, the person on mental health income protection, so they return to work for 612 months back at work, their renewal premium will be the same as their, their age group and their occupation.

There's no penalties, there's no loadings, there's no anything.

They have to have the cover.

So that insurance company is, is tied to them now, yes.

And and you're tied to them as well.

But that's again, it's that get the cover while you're younger and you're healthy because if that health changes, you have a cancer scale, you have a Melanoma or something that again, might be relatively minor at the time.

Unfortunately if you went to get cover off that point, the insurer, yeah, there's some information that you've got a bit of a cancer history or such.

So there, there can be some changes to an application there.

But yeah, so guaranteed renewable is the term there that is vital.

So a lot of people sort of say hey.

Kris Tatt

But again, these are terms that most people like even even even you say.

And I'll go, I hear what you're saying, but I still I'd still come to you to talk about it because I just think, and I think I've got one on mine.

And I only say I think because you know better than me a buy back on my trauma.

So if I do have a trauma claim, I can actually to get that same cover, yeah.

Adam Middlemis

Yeah.

So that's the other important thing, I suppose if you've climbed on the cover, trauma insurance typically does just stop, you've had your payment is your money, walk away.

We often recommend that reinstatement clause where you can reinstate that cover typically within a year for all other trauma conditions or or sometimes the the same one again depending on the claim.

So.

Kris Tatt

Probably had a heart attack, probably don't get another heart attack, but I do get to cover for some of the other.

Adam Middlemis

Yeah, yeah, depends on the policy, but sometimes you could have another heart attack, sometimes you could have another cancer, but it's a lower amount and such.

But yet typically speaking, if someone's gone through that medical event, they are fully aware of the importance of insurance and they want to hold on to or get whatever they can.

Yes, reinstating this trauma cover is is very, very important to a lot of these people.

Kris Tatt

Do you find that more people value it who have had to claim on it?

Yeah, they they really understand the the value of it all.

Adam Middlemis

They've had friends go through that.

Yeah, I, I get a lot of people coming in saying, oh, blah, had cancer, brother in law had cancer or sister's husband died.

I'm, I'm here now, I've got to get myself sorted sort of thing.

They've seen that real life example where they may or may not have insurance and sometimes it's when they don't have insurance.

The persons like holy moly, I saw what happened to my my sisters family when her husband died or or such unfortunately go fund me that raises $30,000 is is wonderful, but not probably the mill or two that they need in cover.

So we have a lot of people coming in for that reason of I've seen it or I've seen that climb or I've seen whatever, so.

Kris Tatt

Because that was that was one of the things I was going to ask you and I've had, I've had a couple of people say it over the years, not specifically towards you, but just insurance in general.

Let us go or it's a sales thing or it's whatever, but I don't see you do a whole lot of selling.

It's it's much more around just sort of saying what do you need?

And let's make sure that you're covered so that if something does happen, it's not it's not an issue.

And and you've, I mean, you're not on the phone everyday cold calling selling people.

It's really just sort of working with people to help them cover what they need to.

Adam Middlemis

Yeah, that's that's right.

I suppose it's stratagem where we've got that model where I'm, I'm a seller and employee.

I'm Yep, I'm not getting bonuses or kickbacks for every sale I make or every time I turn over a policy.

So for me, that's I'll just come in there and this is what I can genuinely say to people and clients is I'm here to do a job and I'm you come to me for insurance or, or insurance is something that you need to have a think about.

I can genuinely sort of say, hey, here's the needs.

We we do sometimes end up with that industry cover or something.

I'm not selling for one of a better word.

But yeah, now it's it's just work out the needs.

Here's the needs.

Here's a product to solve or assist with those needs now now sometimes cost is a factor or availability of cover is a factor.

So we we have to talk through people with what we call self insurance, I suppose where if I say hey you need blower amount of cover that's that's what we talked about you'll need and you say Yep, that's that's what we agreed upon and that has a cost yes.

And you say, OK, I can't change what that cost is.

I can help you find a policy that suits those needs from a range of different insurance companies.

But yeah, yeah, at some point we talk about self insurance where we sort of say, hey, there's a cost of these things.

You're paying an insurance company to take some risk away from you.

Do you take some of that risk back on yourself to save on cost?

So that's something we help people with as well.

Yeah, we're not just taking a product.

Kris Tatt

Out.

It's finding that balance, isn't it?

Yeah, for each client at the end of the day, one of the things I was gonna ask you about was and, and it's, we don't have to talk specifically about this one, but I've got an app at the moment that that you've set me up with to, to help get me a little bit more active.

And yeah.

And so just just talk a bit through the idea around motivating people to, to get a bit more active.

I know for me, I'll sort of, it may really probably get out and do a bit more.

But yeah, there's, there's benefits to that as well.

And, and I think the insurance companies realising if they help people get a bit better with their lifestyle, it, it, it means there's probably a little less risk for them.

And and it means the people they're insuring actually get a better life as well, too.

Adam Middlemis

So that's, that's just right.

So the product there is, I'm happy to say it, but AIA Vitality, it's a, it's a vitality is a, a side product of an AIA insurance product or a health insurance product.

Vitality, I suppose the insurance company, as you said, they, they want you to be aware of your health.

Yep.

They encourage you to go get cheques like cholesterol, blood pressure, typical stuff like that.

They give you points.

So you earn some points, you get a shopping voucher or you do some exercise, you get some more points.

So they encourage you across a 12 month period to, to build those points up and go through the levels.

And that's from a consumer point of view with rewards of Woolworths vouchers or Bunnings vouchers or I get iTunes vouchers on mine.

Kris Tatt

Qantas points as well, yeah.

Adam Middlemis

Qantas used to be Qantas discounts but not points.

But yeah, sorry.

So there are some Vitality flights, sorry, version flights, discounted discounted garment watches and stuff.

But look at the end of the day, they also give you a discount insurance, which is great as well.

Now other, other insurers have some health programmes and such where they do the same thing, They encourage a healthy BMI where they give you a discount on the on the cover.

But for me it's a fascinating thing.

So the vitality is backed by science.

They, they have very low, I think there was a study of a million people overseas where they looked at it and the those active members.

So those members who are going through and participating and going the extra mile for the exercise and such, they had lower hospital admission rates.

They were in and out of hospital quicker than those non participating members.

So they saw some real value there where they can actually provide the insurance at a lower cost in that discount form for those active members, yes, who are aware of it and and Yep, I'm I'm on that programme as well part of that I.

Kris Tatt

Must be good enough if you're using.

Adam Middlemis

It I, I was one of the early adopters.

Actually, we were one of the first members, but we, yeah, part of that they say go off and get some general blood tests.

Now I probably didn't do that very often.

I go to my doctor.

I can't be bothered doing that.

But now I will cuz I get the points and I build through and I get some more discounts.

But part of that, and I'm happy to say that I saw that I had some cholesterol issues that are arising over the years and then the doctor can take over and sort of say, hey, here's how we're going to address that BMI or or whatever it is you, you become aware.

So it's.

Kris Tatt

Yeah.

And that was for me.

There was questionnaires I was going to.

I was like, I haven't thought about this for quite a while.

And it's sort of it.

It probably forces you to take a bit more stock, which we don't always do in our busy lives day to day.

But it's sort of it was sort of building into you getting a bit more of a regular checkup.

Kind of like you go and see your account next year or you go and see your financial planner actually saying, well, do do you actually get your health checked on a even semi regular basis?

And so I thought it was a great motivator for some of.

Adam Middlemis

That oh, it is, yeah, really encourages.

And that's, that's a, it's awareness.

So yes, at the end of the day, if some people do go to the doctor regularly, other people don't, and it's as simple as that.

It's getting those people into the doctor, having an annual checkup.

You can even do it for free with this programme.

But, and yeah, it's not all about the points.

Sometimes it is about the health.

But I'll certainly go there for the points to start with.

And then you, you say that the awareness there.

But now from an insurance point of view, as I said, I yeah, if you talk it through, it's I wasn't aware of my increasing cholesterol.

I have a heart attack or I have some treatment that puts me off work, leads me to a climb.

Quite simply, if I can be aware of it, become a more healthy person, received the medical treatment that perhaps addresses that issue.

Perhaps it's not a claim, perhaps it's not.

And and that's back.

At the end of the day, it's it's better for you because you haven't had a heart attack.

Yeah.

And it's better for the insurance company because they haven't.

Kris Tatt

Well, I think that too, like we're talking about claiming on insurance and things like that, but we don't want to, It's not something you know, it's a bit like, it's a bit like your insurance for the car.

You don't actually really ever want to crash the car and write the car off and the same for yourself as a person, but it's there if you need.

But it should be a a full gap, not a, not not a the first first point of call I think if you can and.

Adam Middlemis

And I often say to people when we're doing this needs analysis and we're talking big numbers, I said we could be several 100,000 or 1,000,000 or 2 million.

Yep.

I quite often say to people, it's not a TESLATO event.

It's not a happy, it's happy, a happy heart attack or, or obviously not happy that someone's passed away.

And it's, it's designed to get you back to where you were.

So it's that, as you said, stopgap to to fill in the gaps of this illness, whether it's a short term cancer or a permanent disability or a death.

Yep, it's to fill in those gaps and put you back on track to where you were supposed to be or where you would have been.

So.

Kris Tatt

But even the other thing I, I probably think there is if sometimes we have these medical events, yes, you go on living afterwards, but living can look a bit different.

Like there's, you know, if it's, if it's a heart attack, it might be a whole change to your diet and how you're living and things like that as well too.

So I think sometimes we discount the fact that we won't be the same after the event as we were before the event, so.

Adam Middlemis

And that's a lot of people to perhaps have the event or think if I had the event, I'll keep working.

It's it's no worries.

I'll Yep, I will work at the hospital bed.

I will work from wherever.

Now my experience, people, it's a very traumatic thing having that diagnosis one day and then booked in for chemo the next week.

Like it's, it's that quick.

Yes.

So it's literally a drop everything moment and go get yourself looked after.

So yeah, I certainly can't quantify that.

I haven't had that experience myself, but I've seen people go through it and say that it's just financial assistance.

I suppose it's you've dropped everything.

You're stressed about your health, you're stressed about your family.

What happens to my wife?

What happens to my kids?

You don't want money to be in that mix as well.

So if you've got that cover behind, you can sort of sit back and go, well, I know I'm covered the financial side of things, which is a massive stress for a lot of people.

Kris Tatt

Yes, but it's not the most important thing at the end of.

Adam Middlemis

The day, No, it's not in that sense.

But yeah, if you can take that off the table, put that aside, you can get the treatment, you can grow if you can do whatever you need to do.

Kris Tatt

Yep.

Adam Middlemis

And have that monetary concern addressed?

Yes.

And have us help you do that claim too.

And that's that's a big thing.

I really want people to come to me if.

Kris Tatt

It is a lengthy process, isn't it?

It's not something like that.

You sort of go, oh, it's a ticket box and, and and that's a yeah, depending.

Adam Middlemis

On what the claim is that it's not evidence, I suppose so why can't you work?

Show us, definitely show us evidence of the illness, show us evidence from a doctor and such.

And that's just getting doctors do it all the time.

They they do the reports have sign off on a few things, but I'm there to, I suppose, project manage where, where I can, I guess if I've got a few climb forms out there at the moment, I I get the climb started, I get the forms, I get the client and explain them what's needed for pre filling the basic stuff.

But I can't, I can't go to the specialist.

So client will help.

We'll do that there, but I'll project manage and get it back to insurance company and and I suppose my experienced insurance companies have been really good to deal with.

Yep, Sometimes I need a bit of a poke in a a bit of a hurry on, but we're there to to ensure that process goes go smoothly as well.

So yeah.

Kris Tatt

I want to shift gears a little bit on businesses because you also work with businesses and I think sometimes people think we've talked a lot about the personal side of it.

But there there can be a real business element, especially if you if you've got a business partner or you're in business with a couple of other people as well too, is to actually think well, what what happens to myself or, or my business partner in this as well too.

And, and so you, you work with a lot of businesses as well and sort of help structure some things there.

So can we, can we talk a little bit about how that looks and, and probably just give people a bit of clarity around what, how you help them there and, and what that can look like because there's a few if couple, couple of quirks and a couple of things to think about.

Isn't that?

Yeah.

Adam Middlemis

Absolutely.

So the, the I suppose the product solution at the end is is similar as I pay for a product or or self insured to extent, but taking it right back to the start of the the process, we we separate those two out.

So if I'm, if I'm looking at you and say, hey, you've got a business need.

Yep.

And you've got a personal need.

We'll separate those two out address the business need with you and your fellow business owners.

Yes, and their personal needs will address that with you and your family as needed.

So the business need we help people ensure for, I suppose unexpected events, but but a designated event, I suppose.

So in a business, you may leave the partnership or the the equity for a number of reasons.

There may be a personal reason where you you've left or you, you better change your heart.

You may leave town or whatever.

We're looking at those immediate unforeseen insurable events.

So your death or your disablement or your illness, I suppose.

Kris Tatt

So or one of your partners, Yes.

And I think people people don't always think about what happens if the other person isn't coming to work each day as well too, and, and what impact that might have.

Adam Middlemis

So it's an important topic from both aspects.

So we, we picture you're in a business with say three people, person AB and C Yep, person BI suppose perhaps passes away.

So they, they've all got a 30% equity holding maybe worth half $1,000,000 each.

Yep, there's a couple of really serious things to consider.

It's, it's #1 how does, how does B's equity get paid for?

So his family is there expecting they, they're going through a very traumatic experience.

Definitely.

They're saying, oh, B told me this, this business was worth half $1,000,000.

They'll come to the Inc and sort of say, hey, where's that money?

We need it today because I've got things to pay.

Inc, however, have just lost a, a key person in their business.

They've lost a key partner that's, that's driving whatever they did.

And they're panicking because they can't perhaps borrow that money because they don't have the business that they did yesterday, but they can't perhaps draw on it.

There perhaps isn't money there for a quick so we effectively especially.

Kris Tatt

These days with the banks it's not.

It's not easy to just go out and get funding at the moment.

Adam Middlemis

And we're still banks actually might be calling in debt that that is there.

So banks say, well, he's gone, you guys need to piony up his money.

Yep.

So what we deserve is we work with the lawyers there to design an agreement, what's called a buy sell agreement, effectively that it will help move the equity back to the surviving partners and help move money out to the deceased or the disabled family or or individual.

So in short, we're we're providing coverage for those insurable events, the deaths, but it is a quick and easy way of getting money.

Call that half $1,000,000 while the interest costs aligned on half $1,000,000 would be 25,000 dollars, $30,000 a year.

Yep.

We can get some insurance in place that'll say, hey, here's the money, someone's died, give that money to their family, take the equity back and let's move on.

Now we can also do what we call key person insurance on top of that.

So individual B was responsible for some lead, some best generation of business.

Each year the business is gonna take a hit, not only that equity value, but the lost revenue.

So we might be able to say, hey, another 200,000 or another 500,000 on top of that pay to the business if they died to help the business get through that.

Kris Tatt

Period.

It's almost like a revenue replacement.

Adam Middlemis

Key person in terms of revenue, key person, if they've got some debt, we look at each aspect there and with their accountant to sort of say, hey, how does this business work?

What's the debt that needs to be covered?

What's the revenue that needs to be protected?

What's the equity value that needs to be covered and work through help them with those numbers?

Kris Tatt

Key person as well.

Does it have to be a director or business owner?

Or could it be if you've got a, if you've got a great sales guy that's on, if you've got a great sales guy that that is, that is helping drive the business, but isn't necessarily interested in being an owner, but if they go it, it does have a detrimental impact on the on the business it does.

Adam Middlemis

And as I said, we can only ensure those insurable events to death and determine if they quit.

Well, that's that's unfortunate, but I suppose yeah, if that person dies, key person revenue absolutely gives that training costs, lost revenue, hiring costs, all that sort of stuff that we know is out there just money for that business to to carry on and not.

I think a lot of a lot of business owners forget that in the event of someone's death, the business might not look like it did yesterday.

Yes, it, it might whether you're right, whether you're an equity holder or not, I'll probably focus on the equity holders because they've got some some large equity value as well that we've got to get out Yep.

And maybe some responsible for some debts, but the Business Today is one person down.

It's a very different view.

That is an emergency situation I suppose for the business in terms of where's the money coming from and how do they pay all of these things.

And worst case, I suppose is the business fails.

The family of the deceased gets no equity value because there is no equity anymore.

Yesterday it was worth half a mil, but today the business is not worth that.

So that.

Kris Tatt

Only should be another another terrible scenario.

Adam Middlemis

Oh yeah, it's horrible.

So it benefits everyone.

It benefits the family, benefits the surviving owners and helps everyone, as we said, get back to that position where where they were yesterday, Yes.

And it'll allow you to grow.

It'll allow you to work through those problems of hiring and all that sort of stuff.

But.

Kris Tatt

And give you a breathing room as well, too.

Absolutely.

Because there's, yeah, there's obviously a lot of adjustment If if a partner does leave a business, it's not, it's not just a, it's well, we'll find someone else.

It's not always easy, very hard to replace.

Usually.

They're usually there because of.

Adam Middlemis

That's right, their.

Kris Tatt

Specialist knowledge or because of their time in the business and the relationships they've built on on the business side.

So you you've probably sent a few of these buy sell agreements either get put into place or or actually get enacted on as well too.

Adam Middlemis

Yeah, Yeah.

So as I said, we work with the lawyers.

I'm not a lawyer.

You need a lawyer to draught up the agreement.

We work on that the the solution side, I suppose for that insurable exit.

But yeah, it's happened.

We've we've seen it happen.

Illness, illness or or such can put someone out of a business.

Yeah, that may be a slower transition at times, which sometimes give a bit of planning time, but it doesn't still provide the the half a million or the $1,000,000 you need to get that person out of the business.

And that person, I suppose, yeah, wants to know that they can exit and get the money for themselves, but they've probably got some debts in their own name that that are holding on to that.

Kris Tatt

Costs they've got to think about.

Or costs.

Adam Middlemis

For the family or debts for the family or some equity value for the family, I suppose.

And, and the agreement too, to be honest, helps a business in another way that the, the deceased.

So we partner B has passed away.

The spouse may say, hey, I can do this, I can come in.

Perhaps if it's not a, a business that requires a degree or such, but they might come in, they might sit at the board table and say, Hey, I, I own 30% of this business.

I'm going to help you run it because I'm better at this than you think I am.

And, and that can be frustrating.

So the that's not about insurance, that's about that buy sell agreement that helps those surviving business owners work with the right people, I suppose.

Yes.

And and helps move that equity value back to themselves and, and pay out that that surviving spouse or family members.

So, and that's, yeah, probably a bit of an extreme example, but.

Kris Tatt

No, but I think, I think at the end of the day, as business owners, there's, there's risks that we think about from a business operations perspective, but we don't always think about what happens if this person passes away or what, what happens if this person gets terminally ill.

And, and they've, they've been given six months, which can just be as much of A shock to this system.

And they may need to leave quite quickly as well too, to focus on health and things or treatments.

And so all of a sudden they, they, they're already pulled out of the business.

And it's, it's, you know, I, I, I just think sometimes we can be very focused on, on the, the, the customers, all the business operations, but we don't always think about what happens to the key people.

Yeah, if something happens, what, what do we do?

How do we how do we change that?

Adam Middlemis

And that partner could have been there for 20 years.

They could have a very strong relationship with a lot of clients.

Now the other thing I didn't quite.

Kris Tatt

Touch on Privy to processes that.

Adam Middlemis

Are absolutely that are here.

Kris Tatt

That aren't documented and there's just all those other elements.

I think for business owners, if you are listening that just make sure that you do a bit of risk management around this because I just think it's the unforeseen that can jump up and bite you that that can be really detrimental.

Adam Middlemis

The other thing that forms all those agreements is the income protection as well.

So income protection, we talk at a personal level.

It's my ability to earn money now at the same time as a business owner, if they are disabled or spending two, five years away from work, they the, there needs to be those agreements in place to help pay out that equity, but also help pay that person's salary than they were earning.

So typically that's the case with these agreements is you might be a waiting period of a couple of months on the income protection.

Yes.

And then the insurance company will kick in and start paying it.

So the business isn't on the line and feeling a bit bad about supporting this business owner that's been there 20 years and same hand, they don't want to pay them for the next 5 years either if they're not there.

So it's it helps move that salary obligation away from the business to that, that that partner or exiting partner because of illness.

They can rest easy that they know they're getting the money.

The business can rest easy that they know they're not forking out salaries for something that they're not.

Kris Tatt

Well, yeah, there's revenue still coming in the door to help fund whatever needs to be there.

Because I know from a policy point of view, you can basically have the business can hold income protection trauma and and life and TPD kind of in.

Adam Middlemis

It can.

We just need to work through a few ownership things there on transferability or tax too.

There can be some tax consequences of holding it within a business or a personal level.

So yeah, we'll certainly provide the advice there.

Working with their account, that's the best structure to cover.

So it's tax effective, but it's also paid to the right person.

Yep.

And making sure that that's all sort of adds up.

Kris Tatt

To what it needs.

Adam Middlemis

To yeah, the right money goes to the right person with as least taxes as possible I suppose.

Is the the end solution there?

Kris Tatt

But I think take home message, if we're, if we're looking at this on the business side, but also on the personal side, it's the numbers, knowing what you're actually in for, knowing what you can claim on and and when to come and actually say, hey, is this is this an event that I can claim on?

Realising that it's not always you've got to be in hospital.

That could well, yeah, the Melanoma event.

There's probably plenty of people out there who don't realise that they've they might have a policy they can claim on or that there's there's an option there that's.

Adam Middlemis

Exactly right.

And suppose that that business cover that we're talking about too.

Just one more quick thing on that.

Yeah, we refer to to equity holders, we refer to seven partners or three partners or two partners and it's all very important.

But if we go back to that sole trader who perhaps has a a business value there because of their effort, because of their goodwill, yes, that perhaps if the, if the timing was right and the transfer was right, they might get some money for that business to help their families.

So maybe half $1,000,000 if I sold my goodwill plus stock.

But yeah, that half $1,000,000, we can actually ensure that single sole trader as well in the same essence of, hey, if you were gone today, the business looks very different than it was yesterday, so.

Kris Tatt

Especially as a sole trader.

Adam Middlemis

Yeah, that person says, hey, my business is worth 500.

Well, perhaps it's not if they're not there.

So in that in the event where they pass away or they're immediately out of the business, we get them some money as well.

So that the money that they're expecting to to realise from that goodwill, we can get that to them as a sole trader.

And it's, it's effectively a an equity payment that the insurance guys are covering.

So we put a value on that and and get that money to them as well where the the goodwill might die with them.

Kris Tatt

Unfortunately, which is AI mean it's a we never want to think about these situations, but I think it's knowing that you covered just removes a bit of that concerned rooms that worry and just helps people.

Excellent.

Well, Adam, I just want to thank you for your insights.

Have you got any take home messages or anything?

Just just something that you think people, if people are listening and they're thinking what, what's the first thing I need to do?

Probably just taking stock.

Is it of of actually understanding what they've got and where it's at?

Adam Middlemis

Have a think about it, have a look at it.

Have a think about if something happened yesterday, what happens today?

So someone's passed away yesterday or they're diagnosed with cancer yesterday.

What does today look like?

Yep, look at what cover you've got and and come in and have a chat.

I suppose at the end of the day, cuz a lot of people don't even understand what they've got and that's fair enough.

Like everything's yeah all edge different policy types got its different nuances and what it will and what pay for so we can explain what they've got and sort of say hey here's where you sit right now Help them with some advice on what they should consider Yep and look at the the different products or different coverage of our or or cut back.

Perhaps they're paying for insurance they don't need.

So sometimes people may have had those life changes where I.

Kris Tatt

Don't think you have just as many conversations around that.

Absolutely.

Yep.

It's almost a reverse needs analysis of saying, well, Yep, do we?

Do we need this much?

It's not it's not about the lottery.

Yeah, at the end of the day, it's really about making sure we meet those needs.

All that, all that stock gap to to to an event that.

Adam Middlemis