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The pitfalls of buying income protection without advice

Business planning tips Brisbane

Business planning tips BrisbaneThis is the true story of a client who purchased over-the-phone income protection without advice, and cancelled his quality income protection policy that had been recommended and sold some years earlier by a reputable risk insurance adviser.  The policy he cancelled was an affordable policy which suited his needs at the time. However, these needs had not been reviewed in a while.

After repeatedly seeing the TV advertising for one of the many over-the-phone, no-medicals insurance offers, he decided to cancel his existing income protection policy and buy what he believed was a cheaper price for a similar product.

After being notified of the cancellation by the insurance company, the adviser rang the client to see what the story was. The client’s response was that he believed that all income protection policies were much the same and he had gotten a much better deal by going direct and cutting out the middle man.

The adviser made an appointment to see the client and proceeded to compare the two policies by laying them out side by side. What the client had actually purchased from the direct insurer (and was completely unaware of) was this:

  •  He had been given a restrictive 5 year benefit period and no other choice. The cancelled policy would have paid the benefit all the way through to age 65
  •  He didn’t realise that the premium of the new policy was actually more expensive. It seemed cheaper because it was quoted as a fortnightly premium. The policy he cancelled was quoted and paid as a monthly premium, but was in fact significantly cheaper for a far superior contract.
  •  The policy he cancelled was an ‘agreed value’ style policy while the new policy was the generally inferior ‘indemnity’ style policy. The difference in definition wording between these two styles of income protection contract is significant in terms the benefit ultimately paid
  •  His needs were never reviewed nor were the consequences of the new policy ever explained. He said he was replacing a policy but he was wasn’t provided with a replacement policy advice showing the comparison between the two policies, which is a mandatory industry requirement

All income protection policies are NOT the same. There are many different types on the market and they are designed to suit particular circumstances and particular occupation types.  One size definitely does not fit all so please seek professional advice when considering personal insurance.

General advice only 

This information is of a general nature only and does not take into account what you currently have, or what you want and need for your financial future. It is important for you to consider these matters, seek professional advice and to read the appropriate Product Disclosure State-ment (PDS) before you make a decision to buy, cancel or continue to hold any product. Call me for a copy of any relevant PDS.

Important

Gary Weigh is the Director of Gary Weigh & Associates Pty Ltd ABN 41 084 228 679, Authorised Representative (no. 256617) of The FinancialLink Group Pty Ltd ABN 12 055 622 967 AFSL No. 240938

Dying with nothing

“Protection is critical!”

A young work-at-home business Mum with an inoperable brain tumour has less than 12-months to live.  She has no partner to support her and is unable to continue working.  She has a personal loan, two maxed-out credit cards and little cash savings to fall back on.  She relies on charity and the financial generosity of friends.

Her greatest regret is that she can no longer provide for her young children.  She is distraught at the prospect of what might become of them after she passes away.  She knows she is leaving them in poverty.

A friend asks her if she has any insurance.  She discovers that she has a small amount of life insurance through her last employer’s superannuation fund.    That will help her children a little after she has gone but is of no use to her while she is alive.

She has no Total & Permanent Disability insurance (TPD), critical illness (trauma) insurance or income protection, all of which could have helped her while she is alive.

She doesn’t know it but had she held her life insurance policy outside superannuation, she may have qualified for a terminal illness lump sum benefit in advance of the death benefit.  Benefits like this are not always available in superannuation.

Whilst financial planning and insurance advice can’t cure her inoperable brain tumour, it will solve the problem of dying with nothing; or worse, dying with nothing but debt.

For business & personal financial advice tailored to your needs call Gary personally on 0408 756 531


How much email marketing is too much?

This is something I wrestle with personally.  At the moment I am busy promoting my new online MyProsperityForum site.  My target market is risk insurance (i.e. life insurance & income protection) advisers, financial planners and home loan professionals.  I am also about to start a keyword and social media campaign to drive traffic directly to the site.

But back to the email issue!  I am emailing other financial professionals to let them know what a great resource this innovative forum is for them personally as well as the enormous benefits for their clients.

Whilst I don’t want to send emails too often, I do want them to know the benefits of using and referring their clients to the forum.  But how much is too much?

I am reasonably well known in the financial planning and business coaching Brisbane communities so I don’t want my emails relegated to the spam box.   That outcome will only serve to tarnish my good reputation.

But I do want to get my messages across.  For example:

  • Non-financial planning financial advisers are regularly asked questions outside their field of expertise.  MyProsperityForum is a perfect solution.
  • Some people, even clients of financial planners, are personal finance DIYs who are very interested in understanding the many tricky financial planning concepts as they apply to both individuals and business owners.  MyProsperityForum is the ideal solution and a service option not available or offered in the past
  • Many people can’t afford to or are reluctant to consult a financial planner.  Again, MyProsperityForum is a perfect solution
  • A lot of people simply want to ask questions of a knowledgeable professional without any obligation or product push.  There is also a lot of value at MyProsperityForum in seeing what other people ask.
  • People want difficult financial concepts (e.g. personal risk insurance, investment, superannuation, retirement, estate planning) explained in plain English.  MyProsperityForum already has such content uploaded in easy-to-read article form