CommInsure has reported two recent claims cases which have taken advantage of the lump sum benefit payment option within its income protection product.
An optional benefit available under CommInsure’s Income Care and Income Care Plus products allows the policy owner to receive a tax-free lump sum benefit instead of the usual income protection monthly benefit if the insured life becomes Totally and Permanently Disabled.
According to CommInsure, these two cases highlight how a lump sum benefit under income protection can be a better or more appropriate solution, given the client’s circumstances:
Claim No 1: Motor Neuron Disease
In October 2009, a 30 year old painter was diagnosed with motor neuron disease (MND). According to the Victorian Better Health channel, the average life expectancy for MND is three to five years from diagnosis.
The client was offered the choice of the usual taxable monthly income protection benefit or a tax-free lump sum equal to 15 year’s benefit.
Given the nature of the client’s condition and his prognosis, the client and his adviser found the lump sum option would best suit his circumstances. The client was paid a tax-free lump sum TPD benefit of $453,618, with no waiting period.
Claim No 2: Post Traumatic Osteoarthritis
In May 2009, a 49 year old self-employed insured broke his left ankle with secondary post traumatic osteoarthritis (almost full amputation of foot). He initially underwent internal fixation but then needed fusion of the ankle joint in February 2010. This surgery left him with a permanent loss of mobility which would prevent him performing the manual duties of his occupation.
Because the client’s policy offered a lump sum payment based on an Own Occupation definition, the client was able to choose a lump sum or a monthly benefit. Again, the client and his adviser, Gerard Sherlock, selected the lump sum benefit option, which saw the client receive a tax-free TPD lump sum benefit of $604,428.
CommInsure reports the client is passionate about the building industry and wishes to stay involved. With the lump sum payment and help of his adviser, the client has re-engineered his business, taking a managerial role and employing a team of people to conduct all of the manual work.
Without the option of the lump sum benefit, the client would not have the resources to make these changes…
Mr Sherlock commented: “Without the option of the lump sum benefit, the client would not have the resources to make these changes and maintain his passion for his chosen industry.”
CommInsure introduced the lump sum IP benefit option in November 2005, which was a first for the industry. Almost five years later, only one other insurer offers a modified version of this benefit, but unlike CommInsure, does not have a tax ruling associated with it.
That was a magnificent benefit and I had one claim which was successful. Its gone, bastardized by the CBA bank managers who suddenly found Comminsure was actually paying claims. There are two similar benefits left in the market, and both are crap. And it was easy to sell if the adviser had the technical competence
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