• AFRM

Case Study



In past case studies we have highlighted times when clients have not recognised valid life insurance claims at the time they have occurred. The claim only being picked up some time later when the client’s AFRM adviser became aware of the event. As such, it becomes what we call at AFRM a “retrospective” claim.


This case study is a variation on that theme. This is the story of a woman with a strong work ethic and driven to succeed. So much so that even when she was enduring ongoing medical issues over an extended period of time, she never seriously considered checking if she had a claim on any of her three life insurance policies.


Not because it didn’t occur to her but more because she simply did not want to make a claim!


Let’s call her Sophie. [Name changed to protect client privacy]. Sophie is a long-term AFRM client, referred to us by an accountancy practice with which we have had a long-standing good relationship.


When Sophie and her husband, Patrick [name changed to protect client privacy] first came to AFRM, she had no Income Protection (IP) insurance cover but did have less than appropriate levels of Death and Total and Permanent Disability (TPD) cover through her superannuation fund.


Patrick had IP cover ‒ but like Sophie ‒ held insufficient levels of Death and TPD cover through his superannuation fund to adequately provide financially for their two children and Sophie if anything should happen to him.


Patrick had stepped away from developing his own business to be the primary carer for their two children while Sophie poured herself into her new professional services practice, determined to succeed as the family’s primary breadwinner.


She had been doing well, the previous financial year drawing a significant six figure income from her practice to support her family.


It is hard to say what motivated Sophie’s drive to succeed. She had prior medical problems with her back. Both children attended a not inexpensive private school. And with a growing firm, she had to generate sufficient billings to cover the cost of employing her small team.


Whatever the reason, it was not uncommon for Sophie to work 100 hours a week developing her practice.


After AFRM’s initial review of the family’s financial position, protection was put in place to ensure that no matter what befell the family, there were sufficient levels of IP, Death, TPD and Trauma insurance to cover all their existing debts and to provide financial resources into the future.


By late 2016, Sophie held four separate life insurance policies:

  • Agreed Value IP cover offering a benefit of almost $14,000 per month through to the age of 65 (with an exclusion for any health issues relating to her back)

  • Life insurance through the family’s Self-Managed Superannuation Fund (SMSF) providing almost $3m to beneficiaries in the event of her death

  • Life and TPD (Any Occupation) through a separate superannuation fund, and;

  • Life and TPD through yet another superannuation fund (this providing the lowest financial benefit).

As result of her 2017 annual review with AFRM Adviser, Phil Hatherly, Sophie’s financial risk management strategy was refined. Some Life and TPD benefits through a retained industry superannuation fund, providing the lowest financial benefit, were terminated.


However, the level of IP cover was increased, as was the level of Death cover provided by the family’s SMSF.


Skip forward to Sophie’s 2018 annual review with AFRM and Phil became aware of an incident in early November 2017.


Sophie had collapsed at work complaining of blurred vision, severe chest pains and pain radiating across her left shoulder. As a result, she was admitted to the local hospital’s Emergency Department. Her discharge form, when she was allowed to go home later that day, noted further investigation into the potential cause was needed.


As Phil dug deeper into the background, it became clear Sophie had been suffering symptoms including a persistent cough, migraine and chest pains for months leading up to her collapse.


The symptoms had persisted through 2018, with a few new ones added, including, flu-like symptoms, episodes of pain down her left side and general weakness in her left arm.

In May 2018, she was referred to a Cardiologist in a bid to find the source of her ongoing bouts of chest pain.


Despite her health challenges, Sophie had been soldiering on, working long hours to ensure no disruption of service to her clients. However, her ability to continue to work long hours was fading.


She had been forced to take time off sick several times through 2018.


To say AFRM’s, Phil Hatherly, was dismayed and distressed when he learned of this medical history would be an understatement.


Through discussion with Sophie it became evident that despite having insurance protections in place, she had never really expected she would ever need to claim. Further, it seemed pride made Sophie reluctant to want to make a claim ‒ even if she had good reason.


At Phil’s urging, Sophie revisited her medical history with her General Practitioner and Cardiologist. Phil was seeking medical evidence to support both a Trauma and potential IP claim.


By November 2018, Phil had finalised all of the paperwork and had obtained all of the supporting medical reports to support an IP claim.


In January 2019, Sophie’s insurer accepted her IP claim with a monthly benefit of around $14,000, subject to monthly reviews of medical evidence to demonstrate that she continued to be unable to work full-time.


A back payment going back to the date of the initial collapse in 2017 was also approved, providing valuable additional funds above and beyond the ongoing monthly benefit.


Meanwhile, Phil kept pursuing the documentation required to support a claim on Sophie’s Trauma insurance. This included getting an MRI brain scan done to look for evidence to explain episodes of memory impairment that had begun to develop, along with transient ischaemic attack (TIA) episodes (which occur when the blood supply to your brain is blocked temporarily).


By July 2019, Sophie gave Phil her completed TPD/Trauma claim form with supporting doctors’ reports from her GP and Cardiologist.


After reviewing Sophie’s history of symptoms, the collapse in November 2017 and the results of the MRI done in February 2019, her GP had declared a diagnosis of stroke and heart issues that he attributed to the original collapse back in November 2017.


He noted a history of stroke in Sophie’s family. The GP’s diagnosis was supported by the Cardiologist.


In August 2019, her insurer advised Phil that the Trauma claim had been approved and that more than one million dollars had been deposited to Sophie’s bank account.


Phil called Sophie immediately, and to say she was overwhelmed is an understatement. The payment cemented their ongoing financial security.


The funds have allowed Sophie to step back from day-to-day management of her business, comfortable in the knowledge that there are sufficient finances in place to look after her family’s needs for the long-term.


The outcome has also been rewarding for Phil, who is now enjoying seeing Sophie take some time to enjoy her life, ongoing medical issues aside. It is apparent she will never fully recover but financially the future is a lot brighter.


For Phil, the lessons to be learned from this case study are clear.


“We always need to be mindful of a client’s situation,” Phil said.

“Sometimes a client is not forthcoming with issues that he or she may find difficult to deal with, let alone come to AFRM to discuss.”
“Claims are a ‘bittersweet’ event – it is distressing to see any client going through severe medical issues, and the impact it is having on them, their family and their business.”
“But when the claim is approved, and the funds start flowing, it is a case of ‘job well done’ – what we advised and implemented has truly worked and provided the financial relief that we always advise clients to seek to achieve.”

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