It’s happened again. A long-time client who holds life cover and income protection called me yesterday very disheartened at the annual cost of her income protection cover.
She has a good argument. The premium is in excess of $5,000 p.a. and her monthly benefit is about the same. She is focussed on retirement and wants as much money put away into super so that she can achieve a retirement of dignity and independence.
It’s what we are known for so I totally agree in questioning the value of this cost. There comes a time when we have to say, there is no real value in the client maintaining this cover. Hopefully, we get to the stage where the client has achieved enough capital accumulation so that they don’t need cover. That’s the plan anyway.
So in discussing this with the client, I explained that we would forward some paperwork so that she could cancel the policy. In our discussion, she also advised that she had recently fractured her arm and still had to work because she had to.
"HOLD ON", I said. "What do you mean you broke your arm?" Yes, she broke her arm but she still had to work because she couldn’t receive any benefits from her income protection policy.
This is where the value of having a close relationship with your financial planner is vital to your financial well-being. My client didn’t know it, but I know that her policy covers her for “specified injury benefit.” If the policy holder receives a specified injury as listed below, irrespective if they return to work or not, they receive a commensurate monthly benefit based upon the injury received.
As a result of her calling me to cancel her policy, we have now put a claim in place to access a monthly benefit for her broken arm.
As an advisory firm, we implement policies for our clients in the hope that they never need them. BUT, when illness or accident happens, this is when our real value is exposed and when we can provide funds to our clients when they need it most.