Total and Permanent Disability Insurance Case History 2
the following is an example of a Case History in relation to Total and Permanent Disability Insurance. If you require advice regarding a Total and Permanent Disability Insurance Policy, please contact us directly.
Wife: Ann (42), Husband Larry (48), Two teenage children, Craig & Emma
Larry and Ann had sold their farming property three years previously. They had enough money to buy a modest home without a mortgage.
To earn on ongoing income, they secured loans totalling $500,000 to buy a manufacturing business. Larry ran the mechanical manufacturing side of the business, and Ann went out and found customers and created markets for their pewter manufactured items. It was an extremely hectic, hard working three years and the business was just beginning to break even. They had 10 factory staff, four office staff, one other sales person apart from Ann. They had done really well and were looking forward to reaping some of the rewards of the hard work and creative endeavours. Plus they were helping 15 staff members and their families by providing work.
Early one Monday morning, Larry complained of numbness in his right hand and arm. He carried on but it got worse and went to his back right hand shoulder blade. He lost co-ordination and could not stand up. At this point he was rushed by ambulance to hospital. He had suffered a clot on the brain – he lost consciousness for two weeks. When he eventually came around, he was paralysed down one side of his body, including his face – permanently.
Larry was unable to ever work again.
When they had taken out the loan for the business, the bank had insisted on Persional Life Insurance Cover to cover the amount of the loan on both Larry and Ann. But there was no other cover. No TPD (Totally and Permanently Disabled)(which he now was), no Trauma / Diagnosis cover, noIncome Protection cover!!!
A small saving grace was that there was a small $50,000 death and TPD cover (Totally & Permanently Disabiled cover)on Larry within his small super fund. Having been farmers, the superannuation fund only contained $65,000 in total, with $50,000 TPD cover. There were also certain conditions on the TPD cover within the super (which there often are) and therefore there were many delays in getting the TPD paid out of the super fund.
Eventually, Ann received the $50,000 TPD insurance payout and in due course received the balance of what was in the super fund = an additional $15,000.
Larry was not dead, so the insurance taken out to cover the loan could not be paid out – it only covered death, not TPD!!! So Ann had $50,000 to somehow manage the finances, the banks demands, the wages, the medical expenses, the extra care now required for Larry, and her two teenage children.
It was a dreadful financial and emotional mess.
Ann was forced to sell the business which then left her with a shortfall she owed the bank. She sold their home which was unencumbered and that paid the shortfall and some of the other expenses. She moved into a rental property and life was difficult from that day to this.
HOW IT COULD HAVE BEEN:…
If Larry had insured himself for $1M Death and TPD and Trauma / Diagnosis they would have been able to have enough funds to pay out the bank, keep the business running and the staff in work. His wife and children would have an asset to work with and life could have gone on with a much different outcome. IF he had insured himself with Income Protection Insurance, he would have had his income coming in monthly to help Ann pay for the day to day living expenses of the family.
BUT he had none of these……..
Insurance is not about ONE policy – it is about a mix of policies to provide even coverage of all exposures. Putting all eggs in one basket is not wise.
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