Case Studies 

These are just a sample of the type of stories we hear about how personal risk insurance – or lack thereof - has helped shape lives – for the better and the worse.

Income Protection - Case Study

Trauma & TPD - Case Study

Life Insurance - Case Study

Business Insurance (Succession Planning) – A Cautionary Tale

*DISCLAIMER: The real names and identifying details of the people involved have been changed in these case studies. These case studies are provided only as examples ONLY.

Income Protection - Case Study

Simon* had been working as a dentist in a small surgery for the past 8 years. Five years ago Simon had taken out an income protection policy to protect his income in case of sickness or injury prevented him from working.

While out cycling one weekend, Simon was knocked off his bike, resulting in a severe neck injury. His doctor told him it would be at least 3 months before he could work to full capacity again.

At the time of taking out his income protection policy Simon selected an Agreed Value contract. Even though his income was less than usual at the time of the accident, he was still entitled to receive the monthly benefit specified.

If Simon had not been able to ever return to work due to the severity of his injury then based on a monthly benefit of $3,125 and given Simon's age of 35 at the time of the accident his potential benefit from his income protection to age 65 would have been $1,695,707.

Trauma & TPD - Case Study

As a healthy and active woman in her mid 40s Karen* never imagined she would be diagnosed with breast cancer.

Karen had recently fulfilled her lifelong dream of starting her own accountancy business. Just after her 40th birthday, she decided to purchase some Trauma Insurance. The policy provided protection in the event of death, terminal illness, a specified serious illness or injury, or total and permanent disability.

Just 5 years later Karen was diagnosed with breast cancer.

The diagnosis was a huge shock to Karen. Not only did she need to think of how the illness would effect her family's future, but she was also extremely concerned about her business.

Karen's medical condition satisfied the definition of cancer under her Trauma Policy. The lump sum benefit paid out shortly after her diagnosis, which gave Karen the opportunity to take some time off work and spend it with her family to consider the future.

Being paid on diagnosis of the condition also gave Karen the financial ability to consider alternative treatments and concentrate on recovery. After surgery and a full course of radiation therapy Karen has an excellent prognosis.

NOTE: While this is not a real case, some of the details are drawn from an actual claim.

Life Insurance - Case Study

Phillip* and his wife Lisa* took out Term Life Insurance cover. They had both always dreamed of bringing up their children in the country.

Five years after they married, and only six months after their son Jack was born, they found the land they had dreamed of building their home on. They took out a large mortgage to buy it and a Term Life policy as protection in case something unexpected happened.

Then six months ago, whilst driving home from the football, Phillip's car collided with another and he was killed instantly. Lisa was absolutely devastated. Phillip was only 32 years old. They like many thought that this could not happen to them.

Today Lisa and Jack are grateful for the insurance cover. The lump sum they received helped pay off the mortgage on the house and land and Lisa still had enough capital to invest to maintain the lifestyle they were accustomed to. Lisa has since sold that property and bought a small cottage nearby so the children can still grow up in the country as Lisa and Phillip had dreamed.

NOTE: While this is not a real life case, some details are drawn from an actual claim.

Business Insurance: Succession Planning – A Cautionary Tale

After graduating from university in 1998, Helen* and Sarah* take a big risk and establish a graphic design company together, each holding a 50 per cent shareholding.

By 2005 they are making a good living and have developed strong relationships with their customers and employees.

Helen’s only concern is Sarah’s new husband, James*, who is starting to interfere in the business with grandiose and inappropriate schemes. Sarah knows how Helen feels and keeps James at arm’s length.

As their business thrives, Helen and Sarah consult a financial adviser about how they can minimise their tax and invest surplus cash. Their financial adviser recommends they both draw up wills and also consider setting up a separate will for their business – in other words, a business succession agreement.

Their adviser also suggests they both take out life insurance, total and permanent disability

(TPD) and trauma insurance as part of their business succession agreement so if one of them were forced to leave the business because of an insurable condition, funds would be available to buy out that person’s share.

Both Helen and Sarah establish wills shortly after the meeting with their adviser. But as they are still young and very happy working together they decide there’s no need to establish a buy/sell agreement at this stage or take out insurance.

One day in 2007 Sarah collapses in the office. An ambulance is called, but the paramedics can’t revive her and she dies in front of Helen and her staff. The cause of death is later established as a brain aneurism.

Helen is deeply affected by Sarah’s death, initially closing the business. After her initial grief subsides Helen decides to go back to work. On the day of the office reopening Helen is reasonably upbeat until she meets her new business partner – Sarah’s husband James. As the sole beneficiary of Sarah’s will, James has inherited all her assets, including the 50 per cent shareholding in the graphic design company.

Over the next month, James makes Helen’s life very difficult. He insists on being involved with all business decisions, even though he has limited business acumen and no understanding of graphic design. Furthermore, one of Helen’s staff members is becoming increasingly uncomfortable around James and wants to resign.

One day while out for lunch Helen bumps into her financial adviser. She immediately remembers her adviser’s recommendation about setting up a business succession agreement, and wishes she had entered into a buy/sell agreement prior to Sarah’s death.

Need an Insurance Quote? Contact Us Today:

Call us on (03) 9890 3388 to book an obligation-free appointment, or get a free online quote now.

*DISCLAIMER: The real names and identifying details of the people involved have been changed in these case studies. These case studies are provided only as examples ONLY.