As a financial adviser I know that the one constant in life is that things will change. I also know that change can mean challenges – sometimes big challenges. This example shows the impact of adequate income protection.
Recently, I met a woman who had been diagnosed with ovarian cancer 5 years earlier and had fought the disease and beaten it. She had formerly been a nurse and had shown incredible courage and fortitude in beating this killer disease but the fight had cost her and her husband dearly; so they came to me for help.
They wanted to know if they could access their superannuation on compassionate grounds and get some funds to re-build their lives.
When I reviewed their superannuation accounts I discovered that, at the time she contracted the disease, the woman had a super account with a small income protection policy attached to it. When I asked her if she had claimed against the policy she looked at me dumbly “What policy?” she said. She’d never claimed.
Fortunately, in this case, there was no claims limitation period that applied so we were able to go back 5 years and make the claim for the whole period. That meant that the small income protection policy she’d forgotten all about allowed her to lodge a claim for $53,000 – a sizeable amount in anyone’s language.
Furthermore, the claim is valid until age 65. Now, because she is only 40, that means the policy must continue to pay the insured amount for the next 25 years indexed at the rate of CPI throughout the period. In simple terms, a further $385,000 in on-going payments.
As an adviser, I know that such claims can sometimes be commuted into a lump-sum payout. This means the insurer can be willing to pay a substantial lump sum now in order to avoid the cost and inconvenience of having to pay the small monthly amount each month for the next 25 years.
The illustrates the value both of a financial adviser and having income protection when you face change. It was great for this client to be able to turn to a professional for help and it’s great for her that I will stick with her through this process and from now on, will always be there for her.
If you want to know more about income protection, call Superannuation in Australia Today on 1300 742 828.
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