Most Australians have a general understanding of life insurance. They are aware of the benefit that life insurance can provide generally in the event of premature death or becoming totally and permanently disabled. They may also know that an income stream can be provided in the event of their being unable to work due to sickness or accident, and this is called income protection.
What most Australians are unaware of, however, are the features and benefits associated with some life insurance contracts – particularly with the retail products. These are what I tend to call the ‘one percenters’ and the ones that will generally get your client from needing insurance to wanting it. Many experienced risk advisers use the features and benefits of an insurance contract to tailor a client’s wealth protection circumstances.
I may be generalising but an example of this could be income protection for a blue collar worker. From my experience a blue collar worker feels it highly likely they would claim on their income protection policy for an injury rather than an illness. Therefore, why would you not automatically include the ‘Day One Accident’ option whereby payments are made almost immediately in the event of an accident? Without this, your client will have to see through the waiting period and continue to be off work before a payment can be claimed. It could even be the difference between your client taking out your recommendation or not.
Below, I have picked out some of the insurance benefits and options that I believe can be the difference between you and your competitors. If you feel that these benefits or options will heighten your client’s interest, then I suggest you automatically include them and explain how this would benefit them.
Lump sum products – Term, TPD, and trauma insurance
Funeral benefit: generally automatically included as a feature of death cover, it is an advancement of part of the sum insured to help pay for initial funeral costs. With heavy advertising in this space from direct insurers, you have the ability to advise your client that a funeral benefit is included.
Guaranteed future insurability: a valuable option that is either included or is an extra cost option that allows for the sum insured to be increased without underwriting upon the incidence of a defined personal event.
Interim cover: While the application for death cover is being assessed, the company provides Interim cover for the client. It can be accident-only or both accident and sickness.
Double TPD: when TPD is a term rider and a TPD claim is paid, then the term sum insured is reduced by the amount of the claim. The term sum insured can be repurchased to the original sum insured without evidence of health.
Trauma reinstatement: allows your client to reinstate their trauma policy following a trauma claim but with limited conditions.
Income protection
Accident option: reduces the waiting period to a specified amount of days if the disability is as a result of an accident only.
Nursing care benefit: payable where your client is under the care of a registered nurse. This benefit is paid beyond the waiting period. Twenty-five per cent of all income protection claims have this benefit paid out initially.
Specified injuries: payment made to your client for a specified condition. Payment is based on a multiple of the monthly benefit payments. Great benefit to use with younger or blue collar workers.
Superannuation contributions: ability to insure superannuation contributions in addition to the insured income.
Trauma option: payment for suffering one of the listed trauma conditions under the income protection policy. A terrific option for clients who are unable to afford trauma insurance attached to their term insurance.
Elective surgery: claim is payable for disability due to elective surgery.
Waiver of premium: ongoing premiums are waived while your client is on claim.
The above are only a few of the benefits and options that I have chosen within the retail insurance offering. Generally these are not available through industry superannuation funds or direct insurance offerings.
It is imperative to have a full understanding of the retail insurance products, benefits and options that you should automatically include as part of your client’s appointments if you feel it will benefit their circumstances. I firmly believe this will not only obtain you a finer edge on your competitors but will also transform your clients ‘needs’ into ‘wants’, meaning more Australians are adequately insured.
David Spiteri is the national risk manager at Centrepoint Alliance
Other articles written by Mr Spiteri can be found here:
Top five concerns for business partners’ insurance
Is tele-underwriting the key to increasing efficiency?
Are risk policies too flexible for our own good?
From the client’s perspective
