Spread it around
Sincere apologies, but as with so many things I have discovered over the past 10 years or so that I was wrong about something. A long time ago, when I'd answer the phone and prepare quotes for insurance brokers all day long, I still remember doing quotes for a broker who I thought, cordially, was insane.
Tuesday, August 24th 2010, 4:42PM 
2 Comments
by Russell Hutchinson
You see, he'd be doing quotes for a modest budgeted premium - let's say $50 a month - and he'd have a little bit of disability income protection, a little life cover, some TPD, the tiniest pinch of trauma cover ($20,000 was typical), and even sell $50,000 of accidental death - and he must have been the only man I ever knew who sold passenger accidental death benefits, which is specialised to the vanishing point.
At the time I suffered from the view, which I have seen shared by many since, that you should try and do one job well, and leave the other cover areas for a later review if they could not be properly dealt with now.
Recent events have challenged that view. A claim with some publicity featured a client who was surprised to discover that they would receive no payment for their lost leg under their TPD policy.
Most modern TPD policies eschew what were considered to be gimmicks - a schedule of benefits that would result in lesser payments for a variety of incapacities.
The schedule was thought to be something from a bygone era - like the advice from sales managers that you should walk down the street with your shoulder rubbing on the wall, so that you would fall into the first open door.
But, as recent events show, perhaps that insurance broker was right.
The important thing is to at least make sure the client gets something in the event of any contingency, and build up the level of cover later.
This is because they simply cannot help but see the whole process of insurance as a sham when they suffer an obvious catastrophe but receive no payment for it.
So spread that cover dollar around.
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You might also be interested to find that of the top eight companies (outside of the banks that I personally advise to), two will not provide a payment for the loss of one limb (the one above and one other).
The other six will provide a partial payment ranging typically from 10% to 25% of sum assured subject to a maximum of $10k to $75k depending on supplier.
They all now cover "loss of use" where some before only paid for loss by "severance".
Even for the loss of the use of two limbs, one will only pay 10% of sum assured to a maximum of $20k over all policies held by that company (surprise who!) and the other, even less at 10% sum assured or $10k max, albeit, with this company they don't say they limit the partial payment to a total if you have trauma under a number of policies with them.
All other six supplier will pay the full sum assured for loss of two limbs (arm or leg or one of each or sight).
Another point to note is that if the loss of the limb(s) puts the life assured in intensive care, they may get full cover through this benefit "Intensive Care benefit" which is available with five of my eight suppliers in various guises.
Another point is that I have seen the latest ratings by one of the rating companies which gives the "said company" a rating of 3 out of 3 for "loss of Limbs". I don't see how that could apply as the other company is rated 0.8 out of 3.
However remember that rating are a tool to be used in discussions and there is nothing like reading the policy wordings.