Recent research by ING(1) revealed many people are reluctant to take out life insurance cover because of a belief that insurance companies will not pay out a life policy upon the policy holder’s death. 

Unfortunately it is a common perception by many that life insurance companies are in the business of avoiding payment of claims.  The reality in fact is very different but before I explain, remember that at the end of the day insurance companies are also a business.   Like all good businesses they must minimise risks, manage their expenditure and aim to maximise profitability in order to provide returns to their shareholders.   

Managing these factors ensures the company is a viable business able to pay out on genuine claims as they arise.  Judging by the number of calls our office received during the recent AIG hiccup, we believe clients want to insure their lives and their quality of life with a company that is reliable, viable and credible.  For more information see our article What happens when your insurance company goes broke.

Getting back to the matter of insurance companies and payment of life insurance claims, last year the insurance industry paid out more than $2 billion in claims.  That’s an average of $8.39 million every working day handed over to support Australians.  $1.6 billion alone was paid out on life insurance policies. 

In the unfortunate event that your family or estate needs to make a claim, your financial planner should be your first point of contact.  They will notify the life insurance company, collect the necessary paperwork on your behalf and assist you to complete the paperwork.   

The expected timelines for processing of the claim may depend on the sum insured.  Most claims however will be processed as soon as proof of death is received by the insurance company.  Many insurance companies give an advance emergency payment to cover immediate expenses such as funeral expenses – hardly the kind of behavior you would expect from an organisation avoiding payment at any cost.  If there is a hold up of the death certificate, other forms of proof such as a cremation certificate may be acceptable to the insurance company.    

In our experience in dealing with life insurance claims in Australia, we have not been involved with any claims that have been rejected.  In the event that a claim is rejected, usually it is because dishonesty has played a role such as the non disclosure of information when the policy was taken out, or outright fraud such as faking one’s own death.

Remember, life insurance isn’t about you it’s about those you leave behind.  There’s a policy to suit every life style and every budget, so if you need to have a second look at your insurance situation, pick up the phone and contact your financial planner to discuss a plan that suits. 

You don’t have a financial planner?  We can help and everything can be done online, offline, over the telephone or through the mail, so call us on 1300 766 323.

Investor Daily,  Life cover myths pervading the country,[online] http://www.investordaily.com.au/cps/rde/xchg/id/style/5428.htm?utm_source=newsletter&utm_medium=email&rdeCOQ=SID-3F579BCE-B4B14B3B

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

I was having a bit of a web surf the other day and came across “perkonomics1″, described as perks and privileges given by a business to a customer, particularly those little perks that may give a client a bit of status or convenience. 

Some of their examples included Lexus owners in Australia given the opportunity for free parking at a number of cultural centers, including the Sydney Opera House or Palmeiras, one of the major football teams in Brazil, reserving 5,000 seats exclusively for Visa Card customers.

When it comes to financial planning fees or insurance premiums people are quick to think of the money going out, on how much it will cost them, and not so quick to think of what they may be getting in return. 

Now your insurance company or financial planner may not offer perks as lovely as a free car park at the Opera House and if they did you may want to question why, but there are plenty of pluses in sticking it out with your financial and insurance plan.

There’s the obvious benefits of course including having choices and financial freedom in your old age and protecting yourself and your family during traumatic events such as illness or injury.  But what are some of the lesser known perks that may make life a little easier for you?  I have listed a few below to get you thinking. 

• Payable benefits may be increased or free accidental cover may be offered by your insurance company if you continue your cover for a certain period of time, often about five years.
• Expert advice from worldwide medical doctors and institutions if you are paid a benefit for a critical illness as part of a trauma or permanent disability policy.
• Grief and support services may be offered to your immediate family as a result of a traumatic event at the time of claim.
• Insurance premiums may be temporarily suspended if you find yourself without employment or on maternity leave. 
• Assistance towards financial planning costs may be provided if a lump sum benefit is paid.
• Loyalty discounts on premiums may be offered if you personally have two or more policies.
• Further discounts may be given by having multiple lives.  We’re not talking about the family moggy here, we mean you may get offered a discount if you and your partner take out life insurance, and additional discounts may be given if your brother or various extended family members also take out cover.  Multiple lives discounts may be offered in a business partnership as well. 
• In terms of investments, Agribusinesses may offer grower tours where you can undertake site tours and as an investor you may be able to buy their products at discounted prices.  
• Fund managers may provide seminars to help you stay educated and on top of financial markets.

Not all companies offer the same benefits, so you may need to shop around to find which products suit you.  Better still, save yourself loads of time by engaging a financial planner to put together an insurance and financial plan to suit your circumstances. 

1http://www.trendwatching.com

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

Before your eyes glaze over with boredom, what do you think is the main cause of mortgage stress?  Most people are quick to point their finger at the banks, people’s lifestyles and the economy in general.  But a report from Genworth Financial, one of Australia’s largest mortgage insurers, found that while rising mortgage repayments did put pressure on the household budget, generally it was a significant lifestyle event that acted as a trigger for a borrower’s inability to meet their debts.

Their research found illness or injury was the biggest cause of hardship, representing 38% of hardship applications in comparison with just 2% of applications because of over commitment to a mortgage.

These interesting statistics lead me to my next favourite topic, underinsurance, where you don’t have enough insurance to protect yourself, your home or your family if a catastrophic event occurs.    I have already written about the massive problem of underinsurance in my earlier blog Life Cover – Protect your family from life’s surprises so I won’t revisit the figures in this article.  But if you’re curious, have look at my blog as it has some interesting figures about life insurance, or rather the lack of, life insurance in Australia

In any event the article did give me cause to ponder, once again, on why people aren’t taking out life insurance.  It might be that people are not sure how personal insurances work or believe it is out of their budget.   Maybe people feel intimidated approaching an insurance adviser for advice.

If you think you’re underinsured, the biggest favour you can do for yourself and your family is at least take the first step and contact your financial planner or insurance adviser to allow them to assess your situation.   Don’t be shy – whatever your budget, whatever your situation, there is an insurance plan out there that suits you and your family.    

If you’re still not convinced that you need insurance to protect your families, consider this.  Life insurance isn’t about you, it’s about the people you leave behind who have to pick up the financial pieces after you’re gone.  Give us a call on 1300 766 323.

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

Income Protection is very simple to set up and something you’ll be glad you spent 3 or 4 minutes listening to.