Life Insurance Case Studies

Life Insurance Case Studies – Real Life Examples

Life Insurance - Karen, 38

Karen was a 38-year-old office manager, working for a manufacturing company. Two years earlier, she and her husband had divorced, leaving her with a mortgage and sole responsibility for the care of her 14-year-old son, Steven.

Now a single parent, Karen became more aware of her financial vulnerability. At the suggestion of a friend who had been in similar circumstances, she consulted a financial adviser.

The adviser carefully talked her through her various options and devised a plan to financially protect her and Steven, if something ever happened to her. Steven had always worked hard and done well at school, and she was particularly concerned to make sure that he would be able to afford to go on to university, if he wanted to.

She took out a life insurance and recovery policy for $500,000. She also took out an income protection policy, in case she ever became temporarily unable to work.

Less than two years later, Karen went home from work early one afternoon with a bad headache and the feeling she might be getting the flu. Later that day she lost consciousness and was rushed to hospital. She had suffered a brain haemorrhage, and died that evening without regaining consciousness.
Under her life policy, Karen had nominated Steven as her sole beneficiary. He received the $500,000 through a trust fund set up by the fund's solicitors.
Steven is now working hard for his HSC, with plans to become a doctor. Or perhaps a vet. Or maybe an architect.

Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms.


Total and Permanent Disablement (TPD) - John, 52

John is a 52-year-old general medical practitioner who works during the week in a suburban medical centre. His main passion in life is his hobby farm two hours from the city.

John and his wife Anne bought the property three years ago, with the plan that he would work full-time for another six or seven years. After that, all their children would have left home and completed university, and they would sell the family home and move to the country permanently. This would also allow time for John to renovate the derelict farmhouse on the property so he and Anne could live there.

Six months ago, he was spending another weekend renovating the farm house. While propping up some floor timbers he dislodged a large wooden beam, which fell on him. It caused a severe fracture of the left knee, head lacerations and concussion, a fractured shoulder, three broken ribs and four fractured vertebrae.

Knowing first hand through his professional life the effects that injury and illness can have on people's lives, John had always been a believer in having adequate insurance protection for himself and his family. Many years before he had worked with his financial adviser and had taken out a comprehensive insurance plan. He had always been careful to keep the plan updated over the years, particularly when major events had happened, such as the birth of his children, and when he and Anne had bought a more expensive house.

John had a TPD policy worth $1.125 million with an 'own occupation' definition. Relatively soon after his accident, he received medical advice that while he had the capability to return to some form of work, he could never again work in medicine as a general practitioner. His claim for 'own' occupation TPD was approved, and the payment made.

Although his injuries prevented John from retiring from medicine on his own terms, the payment funded all his medical and rehabilitation bills, and also enabled him and Anne to still fulfil their plan of retiring to the farm once the children had left home. He will also now be able to fund their university education from his insurance payment.

Anne was particularly pleased that the insurance payment also enabled them to engage a professional architect and builders to complete their dream home.

Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms.


Recovery - Darren, 34

Darren, 34, is an electrician employed by a national building contractor, when six years ago on the advice of his older brother, Darren talked to a financial adviser about insurance protection. Although single at the time with no children or major financial commitments, he insured his life and took out income protection and recovery cover of $200,000.

Darren's main interest in life, aside from Kerry, his partner of two years, is cricket. Priding himself on keeping fit and healthy, he is a longstanding member of his local club side with a reputation as a reliable opening batsman.

One Sunday at an away match two hours from home, he was waiting to go out to bat when he suddenly blacked out and collapsed. He was rushed to hospital, semi-conscious.

Darren regained full consciousness at the hospital, and after urgent and extensive medical testing, he was diagnosed as having suffered a minor stroke. This news came as both a relief and a shock to him and Kerry - relief that he had not suffered something even more serious, and shock that someone his age could have a stroke, a medical condition they had both previously thought only affected much older people.

After a period of rehabilitation, he made an almost full recovery, but was told that he would be on medication for the rest of his life to prevent further strokes.
While he was convalescing, his brother reminded him to check with his financial adviser about whether any of the insurance policies he'd taken out a few years ago would cover him now. Darren did so and learnt he could claim under his recovery policy, since stroke was one of the stipulated medical conditions. With his adviser's help he made the claim and received the full payment of $200,000.

He and Kerry paid off a substantial part of the home loan they had only recently taken out. They also decided they needed a holiday, and used some of the money to take a luxury three-week trip to the USA and Mexico.

Darren also claimed on his Specified Recovery benefit, under his income protection policy, while he was off work. This helped cover their everyday expenses such as their home loan and other bills.

Darren returned to work after four months, and resumed playing cricket two months after that, when the new season began.

Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms.


Income Protection - Maria, 41

Maria was 41 and worked full-time as an assistant store manager in a large supermarket, earning around $65,000. The work was hectic and often stressful but the store was conveniently close to Maria and husband Paul's home.

Paul worked as a national sales manager and travelled frequently, so Maria often had to juggle her time between work and looking after their 12-year-old twin girls. One of the girls, Kylie, was very unhappy at school, which was causing great concern and putting more demands on Maria's time.

When the twins were born, Maria and Paul were concerned that they might not have enough insurance protection. They saw a financial adviser who recommended they insure their lives so that the children's care and education would be taken care of. The adviser worked out an appropriate sum of life cover, and advised that they both take out income protection cover.

Paul was away interstate in the run up to Christmas. It was the busiest time of year at the supermarket, and Maria was working extra shifts. Maria also had to go and see Kylie's school Principal several times. This high-stress period of juggling responsibilities as a mother with her work commitments caused Maria to suffer a mental breakdown. Several other stress factors, which had been building over many years, worsened her condition.

Maria began receiving medical treatment for severe depression and with her adviser's help, made a claim under her income protection policy. The claim was approved and she began receiving the full benefit of $4,100 a month.

Maria is recovering well. The knowledge that the family's ability to pay their home loan and other expenses was unaffected by her time away from work has greatly helped her recovery.

Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms.


Recovery, Life and Total and Permanent Disability - Sarah, 33

Sarah was a highly paid executive in the telecommunications industry. A keen jogger, she gradually began to feel a weakness in her legs while on her daily run. She was only 33 and at first put it down to overwork and general fatigue, but the symptoms persisted and worsened. Eventually she received the devastating news that she was suffering from multiple sclerosis (MS), a chronic, progressive, degenerative disease of the central nervous system. MS tends to occur in women at an earlier age than men, and affects more women than men.

Five years earlier, she and husband Simon had seen a financial adviser, and each taken out $1.5 million life and Total and Permanent Disability Cover with Buy Back and $500,000 stand-alone recovery insurance. With the financial adviser's help she submitted a claim under her recovery policy and received the full benefit of $500,000.

She resigned from her job and paid off some of their mortgage, invested some of the payment to cover future medical expenses, and added a home office where she could work as a part-time consultant.

Sarah's MS rapidly progressed, leading to significant disability which prevented her from working at all. She submitted a claim for TPD based on 'own' occupation, because she could no longer work in her usual job. She and Simon used the $1.5 million payment to modify their home so she could continue living there.

As Sarah's symptoms worsened, her mobility became further impaired and she and Simon accepted that she must move into a full time care facility to get the attention she now needed. This would be very expensive, but the funds invested from her TPD claim two years earlier made it possible.

Recently, after ten years of living with MS, Sarah, tragically, was diagnosed as terminally ill. She was then able to claim in advance her death cover of $1.5 million, which will cover her ongoing 24/7 care.

Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms.


Children's Recovery Insurance - Ron & Alison

Ron and Alison have two young children - Ewan, aged four and Laura, six. They live in a country town where Ron manages the local bowling club and Alison works as a receptionist in a car sales dealership.

Shortly after Ewan was born they moved into a larger house and took out a much bigger home loan. As a result of these two major changes in their lives, they visited an adviser for a review of their financial plan.

The adviser devised a risk protection plan for the whole family. It included life, TPD and recovery for Ron and Alison and children's recovery insurance of $50,000 each for Ewan and Laura. Ron and Alison had found it very difficult to even think about the need for insurance cover for the children. But they were surprised at how low the premiums were.

Four years later, Ewan began experiencing fatigue and pneumonia-like symptoms. Alison took him to their GP and he was referred to a specialist at a hospital 300km away in the city. The specialist delivered the devastating news that Ewan had Lymphoblastic Lymphoma, a form of cancer.

The prognosis was alarming. Ewan was classified in a 'high risk group' because of the aggressive growth of the tumour and the high chance of it relapsing.
Ewan had to be moved to a hospital in the city to start chemotherapy straight away. He had intensive chemotherapy over a twelve-week period. He also had to undergo bone marrow biopsies and a series of lumbar punctures.

Alison left work and moved into a motel near the hospital so she could be at Ewan's bedside to support him through treatment. Every weekend, Ron and Laura drove to the city to stay with Alison and be with Ewan.

The insurance company provided the Freemans with a claim cheque for $50,000 within a week of the claim being notified. They used the money to fund Ewan's treatment, to pay travel and accommodation costs, and to pay the ongoing bills that would have been outstanding as Alison was no longer working.
Ewan is now back at home and back at school, but he still has a couple of years before the doctors can give him the all clear. Ron and Alison are also now considering using some of the money to take Ewan and Laura to the Gold Coast for a much-needed holiday.

Based on a real claim. Names have been changed. This is an example only. Grounds for making a claim and level of benefit can vary from one policy to another depending on their terms.