I often ask medical clients of mine what would happen if they cannot work.
And often, I am told they do not worry about it too much. They have adequate income protection, trauma and PI cover. In the event something goes wrong, they should be OK.
And in truth, that is probably not a wrong statement. But….
I don’t often argue because sometimes clients feel I may have an angle for selling more insurance. Err … no, because I am not a financial advisor, so I can’t sell insurance anyway. And rarely do I get a commission on any referrals I make to a financial planner.
I ask because, as I have told you before, insurance companies are not in the business of paying out claims. They are in the business of collecting premiums and paying dividends to shareholders. I also ask because often, things do not go to plan and have nothing to do with what insurance companies do.
Here is the truth and experiences of clients of our own:
- If You’re Suspended – You’re Stuffed
One of the clients was suspended from medical work. Now, if they are guilty, you may say that’s OK. But what if they are not? What if investigations are continuing? What if the allegations are not correct?
It happened to one of our clients.
They were accused of not following medical procedures by a nurse. The hospital and regulatory body decided there was merit to the case and immediately suspended them without pay and because they were a contractor not entitled to pay.
Because it is a suspension, it is not covered under trauma insurance. Income protection? No chance of PI insurance?
Well, no claim has been proved, and no payout figure has been agreed. Besides, PI is to pay the victim, not you, the policyholder.
So logically, how will you live?
It took 3 months for my client to sort out and cost them $200,000 in lost income. It caused all kinds of problems. The mortgage could not be paid. A tax bill that was payable could not be paid. Credit card debts started to pile up.
The end result? The allegations proved incorrect, and our client was allowed to work again, but by that time, significant financial damage had been done.
- Trauma Insurance
This I have experience of. My claim took almost 6 months to pay out, and what made it worse was that I had a clear-cut case. I was fortunate that I had a team that ensured the business could operate without me, and so my income did not get affected.
We have had clients who are unable to work because of a major event relating to illness. Think heart attacks, cancer and sudden disabilities.
Let’s say it takes 3 months for the insurance company to pay out. Will you be able to pay your mortgage or day-to-day expenses?
- Life Cover
I always believed that death is death. And that is why I often told clients to get the cheapest cost cover. Why?
Well, it’s pretty hard for an insurance company to prove one is not dead when they are, especially if you are holding a death certificate. So, they must pay out, right? Apparently not.
Here’s what happened.
My client, a doctor, was downstairs watching TV with his adult children. His wife was taking a bath, and unfortunately and tragically, she drowned.
Because it was a drowning, the first death certificate had the cause of death as ‘under investigation’. And based on this, the insurance company did not pay out.
After the police investigated the matter and confirmed there were no suspicious circumstances, they informed the state coroner so that they could issue a new ‘clean’ death certificate. 18 months later, my client is still waiting for a new death certificate so that life insurance monies can be paid out.
Fortunately, my client is a doctor and is still earning income. As he said to me recently, if he had drowned instead and the insurance company did not pay out, he thinks the family would have to sell the home, investments, and the family silver just to survive.
The point of this blog is to let you know things don’t always go to plan. And if they don’t, you need to have a plan to deal with it. If you have $0 income for 6 months, will you or your family be able to survive? If the answer is no or there will be financial struggles, you need a plan. This plan revolves around alternative income.
Alternative income is step 8 of our 9-step process to generate more time, more income and more wealth. If you would like to know more, call 1800 281 038 or email hitesh@wowadvisors.com.au.
