Eve’s Life & Trauma Insurance Story
Eve, 38, and Mike, 40 had two young children and what seemed to be the perfect life. Mike earned $120,000 a year and travelled interstate frequently on business. Eve was a stay at home Mum and planned to return to work when both kids reached school age.
The couple saw a specialist risk adviser to find out how best to protect the family should anything happen to Eve. Their adviser recommended that they insure Eve’s life for the value of the mortgage, plus a lump sum to provide an income stream for childcare and school fees. They followed his advice taking out term life insurance and trauma cover to protect against serious illness.
A year later, Eve was diagnosed with a brain tumour. When her condition worsened, the couple used the payout form her trauma policy to substantially reduce the mortgage, and Mike was able to switch to a less demanding job so he could spend more time with Eve and their children.
Nine months later, Eve died. Mike took three months unpaid leave to look after their children. He paid off the rest of the mortgage which relieved a lot of financial pressure that he would otherwise have been under. He was also able to hire a nanny and a part-time housekeeper to help maintain the house and look after the children, and has set up trust accounts to fund their education. All of this was made possible by Eve’s term life cover.
Doug’s Trauma Insurance Story
Doug has been working as an accountant for the past eight years in Perth where he lives with his wife and three kids. Unfortunately for Doug and his family, he was recently diagnosed with bowel cancer. Doug’s diagnosis meant that he was required to undergo extensive chemotherapy, and as a result he was unable to work for six months. As you can understand, Doug and his family were extremely devastated when the doctor diagnosed the condition. As well as dealing with the emotional stress, they also had to consider how they would pay for the mortgage, school fees and other bills without Doug’s income.
Fortunately for Doug and his family, their financial risk adviser had recommended that both Doug and his wife take out trauma cover on top of their Term Life cover. When Doug received the news from his doctor, he called his adviser immediately who submitted a claim to his insurance company. His claim was assessed and Doug received a lump sum payment of $250,000. The payment enabled Doug and his wife to pay for his medical fees; mortgage and school fees, all of which his income would normally have paid for.
The lump sum payment meant not only that Doug and his family’s bills were taken care of, but also meant that Doug could focus all his energies on getting better instead of stressing about financial concerns.
Brendan’s Income Protection Story
Brendan is a 32-year-old employee plumber who earns $98,100 gross income per annum. He and his wife have a $400,000 mortgage, with repayments of $2,800 a month. Brendan is very healthy and leads an active life outside of work and with a child on the way he wanted to ensure that his family would be protected if something happened to him that made him unable to work.
Brendan did some reading on the internet but wanted professional advice about whether to buy income protection insurance through his super account or not, so he contacted his financial risk adviser. Together, they decided that having income protection outside super would place him in a better financial situation, so he went ahead with an income protection insurance policy outside his super account.
While walking home from work one evening, Brendan slipped and severely twisted his knee. After obtaining medical advice, he underwent a knee reconstruction and was unable to work for about four months while his knee healed. His private health insurance was able to cover most of the medical costs, but that still left the income that family would lose while Brendan was unable to work for the four months?
Fortunately, his decision to take out an income protection insurance policy for $6,131 per month covered 75 per cent of his gross income (inclusive of all his superannuation contributions), with a 30-day waiting period.
As recommended by his financial risk adviser, Brendan also took out an accident option, which meant the insurer would pay him one-thirtieth of his benefit for each day that he was totally disabled, for a period of up to a month. This payment would be backdated to the day he became disabled, with the first payment available after the first 30 days.
Since Brendan satisfied this definition, he was able to receive the full $6,131 after the first month of total disability, and $18,393.00 for the remaining three months that he was unable to work. This meant that Brendan was able to concentrate on recovering, safe in the knowledge that his mortgage, car loan and family’s lifestyle would be taken care of while he was disabled.
These case studies are fictional and all figures are a guide only; they are not intended to be advice in relation to any insurance you may need.