{"id":61358,"date":"2022-06-16T16:48:02","date_gmt":"2022-06-16T06:48:02","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=61358"},"modified":"2025-09-02T11:33:50","modified_gmt":"2025-09-02T01:33:50","slug":"life-insurance-case-study-quality-of-life","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2022\/06\/16\/life-insurance-case-study-quality-of-life\/","title":{"rendered":"Life Insurance Case Study – Quality of Life"},"content":{"rendered":"\n
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NSW adviser Elliot Watson and his team have released details of a claims case study involving one of their client families. While the nature of the event and its aftermath is tragic, this case study highlights the critical value of financial advice and how it can deliver quality of life outcomes for insured lives and their loved ones…<\/h3>\n<\/div>\n<\/div>\n

<\/p>\n

\u201cI want to make sure the kids have the same quality of life as if their father was still alive.\u201d<\/p>\n

This is what Debbie*<\/sup>said to us after the tragic death of her husband Gary. A desire only made possible by the personal insurance policies Debbie and Gary were advised to take out by their financial adviser just months before the tragic accident that claimed Gary\u2019s life. This case study highlights the importance of personal insurance advice<\/a> and the profound difference it can make should the unthinkable happen.<\/p>\n

Backstory<\/strong><\/p>\n

Debbie (39) and Gary (40) were high school sweethearts and parents of three young children all under the age of 12. New clients to Elliot Watson Financial Planning in early 2019, they saw financial adviser Elliot Watson to discuss their unique circumstance. Real go-getters these clients had in recent years borrowed money and purchased several rental properties. They were working hard towards growing their wealth. They had purchased two of the rental properties in their self-managed super fund and were fully geared (i.e. had borrowed the full amount). This had increased their total debt to $1.4 million.<\/p>\n

At their initial meeting they were excited to talk about wealth creation strategies. However, their adviser noticed some gaping holes in their financial affairs. Debbie and Gary\u2019s wills didn\u2019t reflect their current circumstances and they had low quality personal insurance with long wait periods that provided just under $1 million worth of cover. Not enough to pay their debts should something happen to one, or both of them.\u00a0 Their adviser explained \u201cthat while it\u2019s not exciting, it is important that we protect the present first, and build for the future second. You will be grateful to have insurance if it\u2019s ever needed, and very regretful if something happens and you don\u2019t have it\u201d.<\/p>\n

Debbie and Gary were hesitant to pay for insurance, but their adviser\u2019s comments rang true for them. After their adviser explained the impacts of not having a personal protection plan, they decided it was important to proceed and get quality insurance to protect themselves and their family. It was agreed to implement the comprehensive financial planning advice in stages as there was quite a bit of work involved. The plan was to implement personal insurance, then estate planning, personal investments, and investment for SMSF in that order.<\/p>\n

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Click through to view a video of Debbie & Gary’s Life Insurance Story<\/figcaption><\/figure>\n

In their advice meeting, the trade-offs between stepped and level premiums were discussed. Long conversations were held about the pros and cons of having $1.5 million sum insured on level premium versus $2 million sum insured on stepped premium and the decision was made to go with $2 million stepped. All the participants in the meeting noted that the probability of a claim was low.<\/p>\n\n\n\n\n\n
OPTION<\/strong><\/td>\nSUM INSURED<\/strong><\/td>\nPREMIUM<\/strong><\/td>\nBENEFITS<\/strong><\/td>\n<\/tr>\n
1<\/td>\n$1,500,000<\/td>\nLevel<\/td>\nCheaper premium over the long term<\/td>\n<\/tr>\n
2<\/td>\n$2,000,000<\/td>\nStepped<\/td>\nCheaper at the start and increases as you get older.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Both Debbie and Gary had existing insurance policies that they had taken out long ago with a bank adviser. Debbie only had total and permanent disability (TPD) cover with a \u2018homemaker\u2019 classification but had returned to the workforce several years ago and was back working full time. Both insurance policies were a poor fit for the clients\u2019 current circumstances, and provided low quality cover, long waiting periods (Gary\u2019s income protection had a two-year waiting period) and provided just under $1 million worth of cover.<\/p>\n

Debbie and Gary agreed to take out $2 million worth of cover, achieved a 90 day wait period covered to age 65, instead of a 2-year waiting period to age 65. A bonus life policy was included in the income protection of $125,000 tax free.<\/p>\n

Debbie also had a back exclusion and mental health exclusion with her existing covers. We liaised with multiple insurance providers (existing and competitors) to have exclusions removed and were successful in having the back exclusions removed however the mental health exclusion was retained. The new policies were finalised shortly after in August and November 2019 (due to waiting on medical reports).<\/p>\n\n\n\n\n\n\n\n
GARY<\/strong><\/td>\nPREVIOUS<\/strong><\/td>\nRECOMMENDED<\/strong><\/td>\n<\/tr>\n
Life<\/td>\n$1,092,953<\/td>\n$2,000,000<\/td>\n<\/tr>\n
TPD<\/td>\n$1,081,800 \u2013 Own<\/td>\n$2,000,000 \u2013 Own<\/td>\n<\/tr>\n
Trauma<\/td>\n$243,097<\/td>\n$200,000<\/td>\n<\/tr>\n
Income Protection<\/td>\n$12,033 \u2013 Indemnity<\/p>\n

2 years \/ Age 65<\/td>\n

$10,000 – Agreed<\/p>\n

90 days \/ Age 65<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n\n\n\n\n\n\n\n
DEBBIE<\/strong><\/td>\nPREVIOUS<\/strong><\/td>\nRECOMMENDED<\/strong><\/td>\n<\/tr>\n
Life<\/td>\n$534,822<\/td>\n$1,750,000<\/td>\n<\/tr>\n
TPD<\/td>\n$522,666 \u2013 Homemaker<\/td>\n$1,750,000 \u2013 Own<\/td>\n<\/tr>\n
Trauma<\/td>\n$243,097<\/td>\n$200,000<\/td>\n<\/tr>\n
Income Protection<\/td>\nNil<\/td>\n$4,290 – Agreed<\/p>\n

90 days \/ Age 65<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Estate planning<\/strong><\/p>\n

It was identified that the clients had completed basic wills (husband to wife and wife to husband) in 2014 when their wealth position was much more modest and there much less debt. At the time of the accident, we had not yet reached the next step of redoing their wills. Had Debbie been the one killed in the accident there would have been big implication for the family with taxation issues.<\/p>\n

The accident<\/strong><\/p>\n

Not long after the completion of their insurance policies, Debbie and Gary went on a special holiday to QLD to celebrate their 40th birthday together and the children stayed with family. After a brunch at a local caf\u00e9, while holding hands crossing the road, they were involved in a freak and fatal accident – struck by a speeding car.<\/p>\n

Gary died at the scene and Debbie was air lifted to Brisbane in an induced coma in a critical condition with head, pelvis, and spinal trauma. Debbie had a severed nerve in her lower spine, and they anticipated she could be a paraplegic and suffer mental impairment from her head injuries.<\/p>\n

After the accident<\/strong><\/p>\n

When Debbie regained consciousness, she started to process the enormity of her family\u2019s loss. Her mind turned to survival, and what the financial impact would be on her family with the loss of her husband, and the potential she could never work again.<\/p>\n

Did we get all the insurance completed?\u00a0 Are we covered? Will the kids and I have enough? Will we lose the house? I need to speak with Elliot.<\/em><\/p>\n

When we were notified of the accident, we immediately commenced the claims process on behalf of our clients. Not long after arriving home from hospital our adviser met with Debbie at her home where she expressed her greatest worry was supporting her family both financially and emotionally.<\/p>\n

\u201cI just want to know, will we run out of money and are we going to lose the home?\u201d.<\/p>\n

\u201cI want to make sure the kids have the same quality of life as if their father was still alive\u201d<\/p>\n

Our adviser was able to reassure Debbie and stepped her through all the policies that had been put in place and what they could claim. By the end of the meeting, after wiping away many tears, Debbie was extremely grateful to know that her family was going to be, at least, financially ok.<\/p>\n

\u201cI am so glad that we met you, without you our lives would have been completely different.\u201d<\/p>\n

Money in the meantime after accident<\/strong><\/p>\n

The immediate concern was ensuring the family had money in the meantime while insurance claims were being finalised. The family\u2019s local community were kind enough to set up a fundraiser and raised $60,000. Gary\u2019s boss paid a bonus salary to the family as a compassionate payment, and Debbie\u2019s work agreed to pay her sick leave for three months while she was off which they did not have to do. This all helped ensure there was no disruption to the family until the compulsory third party (CTP) insurance payments kicked in and covered medical costs and a wage.<\/p>\n

Claims and delays<\/strong><\/p>\n

The months following the accident were difficult for the family. As a business Elliot Watson Financial Planning tried to make things as easy as possible for the family. Meetings were always held at the client\u2019s home, and we were proactive as possible doing as much of the thinking, planning and paperwork for Debbie as possible. Unfortunately, there were delays with completing claims as there was an ongoing police investigation around Gary\u2019s death and Debbie did not know all the passwords to the family\u2019s accounts from memory. The information to access the passwords was stored on Gary\u2019s phone which was still in the possession of police as evidence.<\/p>\n

There was also a delay with Debbie\u2019s trauma claim. Despite Debbie requesting her medical reports before leaving hospital, the request was not honoured. The hospital was in the midst of responding to COVID-19 and Debbie\u2019s request for her medical reports slipped through the cracks. The insurance company was compelled to write to the hospital and request the medical reports \u2013 this process held up the claim for many months.<\/p>\n

Elliot Watson Financial Planning managed five claims and liaised with CTP agencies. The claims included:<\/p>\n

    \n
  1. Income protection claim for Debbie<\/li>\n
  2. Trauma claim for Debbie ($20,000 partial payout)<\/li>\n
  3. Death claim for Gary ($2,000,000)<\/li>\n
  4. Income protection claim for Gary ($120,000)<\/li>\n
  5. Industry super application<\/li>\n<\/ol>\n

    The total funds from insurance claims came to just over $2,200,000. Money that they family will rely on to provide for them for many years.<\/p>\n\n\n\n\n\n\n\n\n
    INSURANCE<\/strong><\/td>\nFUNDS<\/strong><\/td>\n<\/tr>\n
    Compulsory Third Party (CTP)<\/td>\n$125,000<\/td>\n<\/tr>\n
    Trauma<\/td>\n$20,000<\/td>\n<\/tr>\n
    Death Claim<\/td>\n$2,000,000<\/td>\n<\/tr>\n
    Income Protection – Gary<\/td>\n$120,000<\/td>\n<\/tr>\n
    TOTAL INSURANCE CLAIMS<\/strong><\/td>\n$2,265,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Had the couple not reviewed and improved their insurance policies the total funds the family would have to live off would be over $1million less.<\/p>\n

    Ongoing advice<\/strong><\/p>\n

    Part of Elliot Watson Financial Planning\u2019s future role is to help Debbie and her children to set new goals for their life without the support of their husband and dad. COVID-19 has impacted the timing and completion of many of the tasks in relation to property valuations for probate, making a stressful situation for Debbie even more stressful.<\/p>\n

    Ongoing financial advice is crucial for clients as it helps to review existing life goals and create new goals to work towards. Despite the major unforeseen tragedy of losing her husband, we continue to work with Debbie to review her existing goals and set new goals. Debbie has a new goal of building or buying a new family home that is disability friendly and has less yard for Debbie to maintain. Another key focus is reducing stress in Debbie\u2019s life by resetting her investments to give Debbie time to focus on her physical and mental recovery and to spend more time with her children. Debbie would also like to develop a future return to work plan, for when she becomes physically capable of doing so.<\/p>\n

    Between Debbie and her children, they have just over $2.2 million which needs ongoing financial management.\u00a0 Money that the family will rely on to support themselves for many years. Had the couple not reviewed and improved their insurance policies they would have had over $1 million less. The combination of policies they took out has protected their family\u2019s income in multiple ways – with a claimable life insurance policy for Gary and trauma and income protection policies for Debbie.<\/p>\n

    Since the accident Debbie has regained movement in her legs and avoided any brain damage. She has been informed she needs a pelvis and hip replacement and will require ongoing modifications to her car and home to help her mobility. It is anticipated that she may be able to return to the workforce sometime in the future if she continues her recovery path, however she will have a permanent disability. COVID-19 has disrupted plans for her surgery, and she is still on a waiting list.<\/p>\n

    We provide Debbie and her children with ongoing financial advice to help manage their portfolio, debt, and investments. Income protection payments combined with the invested life and trauma insurance payouts provides an income of $160,000 per year. This achieves Debbie\u2019s goal of providing the family with a quality of lifestyle equal to that they would have lived had their husband and dad still been alive.<\/p>\n

    In conjunction with our estate planning specialist, Debbie\u2019s will has been updated to reflect her new situation and circumstances and appropriately provide for her children should something happen to her.<\/p>\n

    Conclusion<\/strong><\/p>\n

    The advice provided to Debbie and Gary at their initial appointment, and the extra time taken to highlight to them the importance of personal insurance has, and will continue to have, a profound impact on the quality-of-life Debbie and her children live.\u00a0 Without their improved personal insurance policies, Debbie and her children would be in a much more dire financial position, with the very real prospect of losing their home. The importance of personal insurance, and the impacts of having it or not, should not be undersold.<\/p>\n

    Life changing advice that will last a lifetime.<\/p>\n

    The information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. The views expressed in this publication are solely those of the author; they are not reflective or indicative of licensee\u2019s position and are not to be attributed to the licensee. They cannot be reproduced in any form without the express written consent of the author. Elliot Watson Financial Planning Pty Ltd ABN 70 610 168 646\u00a0is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429<\/em><\/p>\n

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    \"\"<\/a>Elliot Watson is the Managing Partner of Elliot Watson Financial Planning<\/a>. He is an award-winning Certified Financial Planner (CFP) with a particular interest in growing wealth and minimising financial risk through personal insurance…
    \n<\/em><\/p>\n

    *<\/sup>Names and some details in this case study have been changed to respect the privacy requested by the family.<\/p>\n<\/div>\n

    Back to Adviser Focus Main Page…\u00a0<\/a><\/span><\/p>\n\n","protected":false},"excerpt":{"rendered":"

    NSW adviser Elliot Watson and his team have released details of a claims case study involving one of their client families. While the nature of the event and its aftermath is tragic, this case study highlights the critical value of financial advice and how it can deliver quality of life outcomes for insured lives and […]<\/p>\n","protected":false},"author":3,"featured_media":61374,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6868,8294],"tags":[],"class_list":["post-61358","post","type-post","status-publish","format-standard","has-post-thumbnail","category-adviserfocus","category-claims"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/61358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=61358"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/61358\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/61374"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=61358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=61358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=61358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}