CHRISISM #46 - The Miracle Benefit

25 July 2017

A month ago in Chrisism#44 we looked at “The Miracle Product” – now we need to appreciate “The Miracle Benefit” within “The Miracle Product”! Let me introduce “The Miracle Benefit” by suggesting that you avoid recommending stand alone Trauma Cover to clients who are under 50 years of age. If you want to understand why – then read on!

Let’s just assume that you have added Death Cover to your Trauma Cover recommendation to your client and that the sum assured for both types of cover is $500,000 and the Death Cover has a 12 month buyback option.

Two years down the track your client has a massive heart attack and everyone thinks he is a “goner”. How much does the policy pay out to your client who has had the massive heart attack? $500,000, right, as that was the Trauma Cover sum assured?

But against all the odds, and as frequently happens in this day and age, your client recovers from his heart attack, so twelve months after his initial heart attack, what would you make sure your client does? Buy back the Death Cover, right?

Then 2 years later your client has another massive heart attack and this time it kills him. How much will his policy pay out on his death? $500,000 Death Cover, right? But hang on a minute – how much has this policy paid out to your client and his family in total? Answer:- $1,000,000. And yet – at no time was there a premium being paid for more than $500,000 cover! I think that might be called a “Miracle Benefit” within the “Miracle Product”!

Quite apart from the “miracle outcome” outlined above, I would advise against recommending stand alone Trauma Cover to any clients under the age of 50. The reasons for this are twofold. Firstly, depending in which state you are based, the Death Cover could be a “freebie” for your client. This is because, in some states (including NSW) you pay stamp duty if you buy stand alone Trauma Cover, but you don’t pay stamp duty if you attach Death Cover to the Trauma Cover – and for your clients under 50 the Death Cover costs no more than the stamp duty (and even less for your younger clients), so the Death Cover is basically free.

Even in those states where the stamp duty advantage does not apply, I would advise against stand alone Trauma Cover simply because of the “14 day survival period” clause. You need to make absolutely sure that you have explained in detail how this clause works in order to avoid potential issues (especially with the deceased’s family) in the event of the life insured dying within the 14 day period after suffering a major trauma. The chances are that the life insured will need that Death Cover anyway, so they might as well have it attached to their Trauma Cover (as long as it has a 12 month buyback option) as anywhere else.

If this “Chrisism” has been of value to you, then imagine how much value you would get from a whole day’s worth of similar client engagement ideas! If you are based in Adelaide, Perth or Brisbane, then you still have time to register now for my full day Risk Workshop by clicking on the link below

Register for your City using the links below.
Cost: $450 + GST per person
Earlybird: $400 + GST per person
Time: 9.00am – 4.30pm

Adelaide - Wednesday, 26 July

Perth - Thursday, 27 July

Brisbane -  Wednesday, 2 August

The Risk Workshop by Chris Unwin

Are you a financial adviser who would like all of your clients to have appropriate types and levels of personal protection? But perhaps you feel you need a more structured and client friendly engagement process?