How quickly our world can change. Just a month ago I was telling you that I was looking forward to sharing with you some of the highlights of the learnings from the 2020 AFRM Team Retreat, scheduled to be held late March.
Then the full ramifications of the COVID-19 pandemic hit, the Team Retreat was postponed, all AFRM team members commenced working from home and ‒ perhaps like you ‒ we have been working furiously communicating with our clients to explain the implications of COVID-19 on their respective financial risk mitigation strategies.
We have, of course, also communicated with clients and referral partners explaining our business continuity plans to ensure we continue to provide the highest levels of service. On top of all that, we have been working at pace with our clients, reviewing policy coverage and providing advice to ensure they have (where appropriate) the best possible Agreed Value Income Protection (IP) cover in place prior to APRA’s banning of the sale of Agreed Value IP products from 31 March, 2020. The advantage of Agreed Value policies is that they provide more certainty at claim time, as the insured amount is “agreed” at commencement and not subject to variations in income earned at the time of claim. As of 1 April, we will never again see the level of certainty provided by such IP products in the Australian life insurance market. And, of course, further product restrictions have been mandated by APRA from 31 March 2021. There’s something of a parallel here with the issues facing a number of clients as a result of increased financial pressures due to COVID-19. And that is; once a good insurance policy is gone, you run the risk that any new policy you establish at some later date is going to have a level of uncertainty inherent in the new product's terms and definitions. On the COVID-19 front, we have been in constant contact with insurers seeking updates on their respective COVID-19 responses so that we can pass on any relevant information to our stakeholders as soon as possible. As we all know, government announcements are coming at a rapid pace, with measures to provide stability to the economy and provide support to financially affected individuals. We have been advising our clients that it may be prudent to assess the government measures implemented to determine how they affect each client financially before making any decisions to cancel or put premiums on hold. As highlighted above re APRA’s banning of Agreed Value IP cover, cancelling cover now can mean losing the level of certainty in products that will no longer be offered again in the market. This is an important point that all clients should understand. We have also been highlighting that if a client chooses to put a premium on hold, depending upon the terms of their policy, they may be forfeiting any right to claim during this period. The four key messages we have been sharing with our clients are as follows:
COVID-19 is a covered condition
Individual Income Protection (IP) policies cover any illness that you suffer if it impacts your ability to work, as confirmed by your treating doctor. The selected waiting period on your policy will determine when a benefit would commence being paid. Pandemic illnesses are not an excluded event on current individual policies including for death.
Income protection cover can be maintained if you lose your employment
In fact, we urge all our clients not to consider cancelling IP if unemployed on a temporary basis (i.e. not retirement). In the majority of policies cover can remain in force and indeed claims can still be made for covered conditions, even if unemployed or stood down without pay at the time the disability occurs.
You must be disabled by an illness [or injury] to receive claim benefits
Loss of income that is not a result of you personally contracting COVID-19 is not covered by IP policies.
You may have some premium payment relief available
In circumstances where your premium affordability becomes an issue due to income interruption or cessation - redundancy, business closure, stand down of employment - depending on the policy you have there may be a premium ‘holiday’ available. The terms that apply differ; please contact us for assistance in assessing your specific eligibility. We have also included below the case study a set of COVID-19 Frequently Asked Questions [FAQs] that we hope may be helpful for you in answering any questions your clients may have in relation to their life insurance cover. You can also download a PDF version here if you would like to share these FAQs with others. Finally, we are enormously proud to share with you this month another good news case study that is a tribute to the hard work of AFRM’s Melbourne team over a period of more than a year, advocating on behalf of a client with a rare medical condition. In April 2019, we were successful is securing a benefit for the client in relation to her TPD claim and just last week we finally received confirmation from the insurer that our client’s Trauma claim would also be honoured. Achieving such a positive outcome after so many months of “fighting the cause” brought tears of joy not only to our client but to our own team members too. Good to see good things happening, even in challenging times. Yours sincerely, Nicholas Hatherly Managing Director.
Case Study
Even highly literate and astute professionals can need assistance handling insurance claims when they fall ill and are not operating at their peak.
That was the case for successful lawyer, 44-year-old, Chloe [name changed to protect client privacy].
Chloe was referred to AFRM by her financial adviser in January 2019 because her claims were complex and her Myalgic Encephalomyelitis (commonly known as Chronic Fatigue Syndrome) was making the process challenging to manage on her own.
Symptoms can include issues with brain function, the gut, the immune, endocrine and cardiac systems.
At the time she came into our care, Chloe was not working due to her illness and was already receiving benefits from a successful Income Protection insurance claim.
AFRM has been supporting Chloe with additional and quite complex Total and Permanent Disability (TPD) and Trauma insurance claims.
Part of the complexity derived from the fact that diagnosis of Myalgic Encephalomyelitis (ME/CFS) is difficult. The condition is not well understood in the general community or in clinical professions. In fact, it is widely misunderstood and finding appropriate treatment and management tools is often very difficult.
Accordingly, AFRM’s support through the claims process included getting additional testing done, exploration of the possibility of obtaining independent or secondary medical opinions, negotiations over the appropriate interpretation of the definitions of levels of disability, including of course, extensive liaison with the insurers and Chloe’s superannuation fund through which the insurance is held.
In April 2019, AFRM was pleased to advise Chloe that her TPD claim was successful, with the insurer paying almost $270,000 into her superannuation account.
At that time Chloe said. “The help you have given me is way beyond what I expected, and I am very grateful.”
She also recommended our services to ME/CFS support charity, Emerge Australia, and to everyone else she knows.
However, achieving a positive outcome for Chloe’s Trauma claim proved far more challenging.
Two of our Melbourne team members ‒ AFRM Claims Advocacy CEO, Bruno Muraca, and AFRM Advice Associate, Sonal Brar ‒ have been working on Chloe’s behalf since January 2019.
Sonal said she has spent so much time working with and supporting Chloe that to say theirs' is a client/service provider relationship does not quite do it justice.
“Despite her ongoing struggle with her health, Chloe is such a positive person and it is always a pleasure to speak to her,” Ms Brar said.
“The amount of times I have spoken to her, she is more like a friend now than a client.”
Upon getting the news her TPD claim had been successful, Ms Brar said Chloe said she felt “lucky” to have found AFRM to assist her.
Meanwhile, Bruno outlined why it took so long to achieve a positive outcome on Chloe’s Trauma claim.
“Chloe’s condition is not widely understood, and the insurer suggested that the Trauma policy did not cover Myalgic Encephalomyelitis,” he said.
“We asked Chloe to get an independent medical assessment done and that too could not unequivocally diagnose the illness.”
“But the fact is, we could recognise that Chloe’s daily living and quality of life was being impacted, so I reviewed her policy and identified that we should relodge her claim, this time based upon the fact that her condition meant Chloe is unable to live independently; without care and support.”
Another medical opinion was sought that validated this argument and that medical report was submitted to the insurer in February this year.
Armed with this new approach, Bruno escalated Chloe’s case to the insurance company’s Chief Medical Officer, highlighting Chloe’s permanent and worsening condition.
Last week, Bruno and Sonal were delighted to call Chloe and share the news that the insurer had now accepted the claim and would be paying a benefit of more than $800,000.
They said they all shed tears during that joyous phone call.
Chloe’s response to Bruno’s follow up email with the insurer’s formal advice that her claim had been accepted was simply:
“THANK YOU, THANK YOU, THANK YOU!!”
The benefit couldn’t have come at a better time. Chloe’s husband had just lost his job due to the COVID-19 pandemic.
Frequently asked questions re COVID-19 pandemic and insurance
1. Do any of my life insurances pay me if I lose income due to this pandemic?
Have you been diagnosed with COVID-19? a. Yes: then Income Protection [IP] benefits are payable if you are either quarantined or otherwise disabled from working, based on the policy terms e.g. the waiting period will apply. If you die, any individual death cover you have will pay. b. No: loss of income without a diagnosis of COVID-19, or any other disability or illness that impacts on your ability to work, is not covered
2. Why is simple loss of income not covered?
All the insurances we advise on are intended to protect from the financial effects of illness, injury or death, but not the financial effects of loss of income source from external risk factors such as (unemployment, forced closure of business etc…)
3. What if I have lost income and can’t pay my premiums?
Some policies – not all – contain a “premium pause” or “involuntary unemployment” feature. This may apply to any form of life insurance you are paying for. This feature allows a premium ‘holiday’ of between 3 and 12 months and each policy’s terms to qualify are different. Access to this relief requires you to provide ‘satisfactory’ evidence of cessation of employment. Importantly, accessing any form of premium holiday typically means you are not covered while premiums are suspended. If you regrettably find yourself unable to pay premiums and would like to know your specific policy’s options, please contact us for advice.
4. What do I need to do if I get symptoms of COVID-19, in relation to claiming?
Any IP claim needs the establishment of a ‘date of disability’ to determine when benefits become payable. If you have symptoms, even if you are not yet tested for the disease, ensure your GP has a record of your date of symptoms appearing. Under the new telehealth arrangements, you can ‘visit’ your doctor on the phone or online and this will be bulk-billed and a record of the consultation will be kept. This will suffice for your claim record should you need to then claim.
5. Why should I keep my IP policy if I am not working?
Firstly, under most policies you can claim if you have an illness or injury even if you were not working at the date of disability; this is how most IP policies work*. Secondly, your policy is ‘non-cancellable’ meaning you can keep it through periods of unemployment as long as premiums are paid (see also 3. above). If you let your policy lapse or cancel it, when you commence working again you would need to undergo full underwriting assessment (requiring application and medical and financial records as you’ve done previously). You would therefore be risking the security of getting future cover for the rest of your working life. * Note: if your IP policy is an indemnity policy, then the amount of insured benefit you can claim will be affected by any period of low or no income prior to the date of disability.
6. What if I have an ‘industry’ fund IP policy?
Some group insurance policies – those that provide cover to members of large superannuation funds – have pandemic exclusions. At the time of writing this guide, many of these funds have announced that if their life insurance cover has a pandemic exclusion, they are waiving this exclusion for this pandemic outbreak. If you have insurance attached to your industry or public offer superannuation plan, we suggest you contact the fund, or check online where they may have announced this for members to refer to.
7. Can I check my available benefits for myself?
If for any reason you aren’t able to contact AFRM, check your policy schedule which is sent to you each year by AFRM. You will find your insurer and your policy number(s) listed on that schedule. Every insurer has a service centre which some are staffing out-of-hours as well as during business hours. Go online to find the service centre number and seek the information you need from the insurer direct. It’s wise not to rely on the Product Disclosure Statement [PDS] that is available online as your policy may not be the current one on offer. This is a backup only, however; we prefer that you contact us as it’s our job to support and guide you through this difficult time.