Just like the adage ‘the mechanic who doesn’t get his own car serviced’, I’m always amazed at the number of financial planners that I know who don’t practice what they preach. Planners who haven’t fully insured themselves or their family, colleagues who never glance at their superannuation or haven’t put in place a regular investment plan for their future.
Don’t get me wrong, I’m not having a go at these professionals, as they are entitled to run their own finances how they wish. But for me I would have trouble recommending a strategy to a client that I myself had not implemented where appropriate. How do you tell a family to take out trauma cover when you haven’t obtained it yourself? If it’s good enough for a client it should be good enough for you, the adviser.
I’ve always had income protection in place ever since I started working in the industry eleven years ago but it wasn’t until a client and good friend had a claim that I re-evaluated my own policy. She gave me a call because she had broken her leg and was concerned about how she was going to be off work for 3 months. My financial planning brain kicked in and I was happy to tell her that the income protection policy I had put in place two years ago would be claimable. Not only that, because a broken leg is covered as a ‘specific injury’ benefit, she would not have to go through the normal waiting period but would be paid a 3 month lump sum benefit. After a call with the insurer and submitting her x-ray, she was paid this money in a week.
I was stoked to have assisted – my first insurance claim – but sadly it wasn’t long before I compared it to my own situation. I also played sport and a broken limb wasn’t out of the question, could I claim through my different insurer? I had set up my insurance differently to my friends, with a portion of it held in super, to keep down the cost. However this meant that I was not eligible for the specific injuries clause.
Christmas in a moonboot
Hmmm – time to change!
Cut to: December last year where I am walking out of the office and manage to roll my ankle crossing the street. I didn’t just stumble, but heard a loud crack and in relatively quick order was on the ground gasping for air and being attended to by kind strangers. I’m diagnosed with a fractured ankle and given a ‘moonboot’ & crutches for at least the next 6 weeks. The thought doesn’t occur to me for a couple of days but when it does – can I claim on my income protection policy?
I made a call through to my insurer, submitted my CT scan and was paid two months of my monthly benefit amount. Financial support just in time for Christmas, with the added bonus that I didn’t need surgery.
Whilst it’s never pleasant to think about it, insurances are there to protect you in tough times. To me that means it’s better to have it, and not need it, than to need it and not have it. And a lot of the time the need for this is demonstrated in someone else’s situation – so when your adviser tells you about a likely claims scenario, it’s probably more of a personal story than you realise.