Fool-proofing your insurance with a financial adviser

By Grace Ormsby

August 10 2020
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Did you know advised individuals are more likely to be successful when making an insurance claim? Here’s why.

Fool-proofing your insurance with a financial adviser

Andrew Zbik, a senior financial planner with Creation Wealth, has conceded that insurance “is a complex thing”.

“Different insurance policies cover you for different events. The right combination of insurance complement each other to give you protection for several different scenarios, which may stop you from working,” he explained.

“A financial adviser ensures you have the right insurance in the first place, reviews your policies annually to ensure they are still right for you and is available for when you need help – especially when a claim needs to be made.”

According to the Australian Securities and Investments Commission (ASIC), advised individuals making death benefit claims have a 97 per cent success rate, compared with an 89 per cent success rate for unadvised people.

When it comes to TPD claims, advised clients have an 81 per cent success rate, while just 67 per cent of unadvised individuals have their claims approved.

“Broadly speaking, people who have obtained an insurance policy through a financial adviser or group super scheme (i.e. employer-sponsored fund or industry super fund) benefit from a higher percentage of successfully paid claims compared to people who try to go it alone,” Mr Zbik commented.

From the financial planner’s perspective, there’s a number of reasons as to why this is the case:

More total and permanent disability claims via advisers and group super

“When I speak with many clients, there is a very low awareness as to what total and permanent disability insurance is,” he conceded.

“Total and permanent disability insurance provides cover if you are totally and permanently disabled. It helps cover the costs of rehabilitation, debt repayments and the future cost of living.”

According to Mr Zbik, there is a lack of awareness among those who go it alone that this type of insurance even exists: “I think that is reflected in the very low number of claims (79) for those who went it alone versus the 18,998 who went via an adviser or group super scheme.”

More disability income/income protection claims via advisers and group super

“This type of insurance cover replaces the income lost through inability to work due to injury or sickness,” the financial planner noted.

With waiting periods and benefit periods varying wildly, how you set up your income protection will heavily influence how and when you can make a claim.

When in need, you have someone to call if you receive advice from an adviser or group super scheme

Drawing on his own experience, Mr Zbik commented that when one of his clients was diagnosed with cancer, they contacted him.

“I was able to do all the groundwork for investigating whether they were able to make a claim and then helped them through the claims process,” he revealed.

“It took 49 days from when my client informed me that they had cancer to when they received their benefit payout,” the financial planner concluded.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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