The Power of an Insurance Review
About 5 years ago existing clients of mine referred their friends Mike and Michelle (not their real names) to me. I met with Mike and Michelle at their business with the purpose of reviewing both their business and personal insurances. They had not seen anyone in regards to their policies for years.
Like many people I meet they had an extensive amount of cover, several different policies from a number of different providers had accumulated over the years from different advisers, – however they didn’t know the details of what they had.
We worked out what would be an appropriate level for their current situation, as their three kids had now left home, and I gathered all of the information regarding their existing policies. At that stage they were spending over $1,500 per month on a variety of Business and Personal Life/Trauma and Income Protection Policies.
Upon reviewing all of these and consulting with them we restructured their cover to suit their current needs, along with updating them to best practice policy wordings (ensuring better coverage). The end result? They saved over $600 per month in premium expense and had better quality policies in place.
This example, as it stands so far, is a fairly typical occurrence when I review people’s insurance cover. Mike and Michelle’s case had an extra and unexpected benefit. Michelle mentioned to me when we met that she had had Breast Cancer two years before, had surgery, chemotherapy and radiotherapy, and thankfully had come through this stressful ordeal to be healthy again. Mike mentioned how much time away from the business he had spent taking care of Michelle. Financially, they were just starting to recover to the point they had been at prior to her diagnosis.
What they didn’t realise, but I discovered through my review of their policies, was that Michelle had in place at the time Trauma Cover of $250,000. I made a claim with the insurer and they had these funds in their bank account within two weeks of our initial meeting.
They were so thankful. However if their insurance advisor had been in regular contact or reviewing annually with these clients they could have had these funds in place at the time of the treatment. I am sure it would have been a great relief to them at that time. And it is dreadful to think that if no one had ever reviewed their cover they may never have realised the claim was there and payable.
As this real life story shows, and as I truly believe, one of the most important components of any Life/Health Insurance Plan, whether Business or Personal, is to review your policies regularly. And by regularly I mean once a year.
Too often I meet new clients who have had the same cover in place for more than 5 years and it has never been reviewed. Reviewing involves checking the appropriateness of cover in terms of benefit value, amount and type, quality of the policy wordings versus the new products available today, and the premium expense.
There is a common misbelief that you need to have Life insurance until you pass away, no matter at what age that may be. Because of this misbelief many people just accept the premiums increasing considerably over their older years, but the value of Life Cover is for the mitigation of risk.
Risk is created initially through having debt, whether for business or personal or both, and certainly having the financial responsibility for your growing children. However as debts are repaid, passive investment income grows and children grow up, your reliance on your Life cover and the need for it reduces.
So if you are like Mike and Michelle and have policies that you really don’t understand and/or that are now costing a lot per month and that have not been reviewed within the last 12-18 months, it’s definitely time to review their appropriateness. Please give me a call, I am happy to help.