An extra 3.3 year benefit payment of almost $300k for Income Protection claim.
We recently had the privilege of assisting a business owner client in his early 40s, with a young family, with his Income Protection claim. Unfortunately, he was diagnosed with Ankylosing Spondylitis in Nov 2017, leading to constant back pain and many other complications, including three hip replacements and ongoing stress, which meant that he couldn’t work in his business anymore.
However, despite some challenges, we secured a claim outcome that exceeded everyone’s expectations.
Background
Our client had two Income Protection policies. One with a five-year benefit period and a second policy (Agreed) with CommInsure (now AIA), offering a two-year waiting period and benefit until age 65. The benefit amounts covered the wages he drew from their business, with the second policy intended to start paying out once the first policy expired after five years.
The client and his adviser initiated the claims process with AIA early in 2022 to ensure that the benefit payments can commence immediately after the first policy finishes paying its 5-year benefit in February 2023. However, during the process, AIA requested extensive information about the client and their spouse’s involvement in all ten of their different entities, along with financial records spanning five years. The adviser and the client were unsure if this information was necessary for the claims assessment and were daunted by the prospect of providing 50 sets of financials and uncertainty around some questions. To alleviate their concerns, the adviser asked us to help navigate the process, bring it all together, and act as the sole point of contact with the insurer.
How we helped
After reviewing his insurance application, policy schedule, PDS, and financials of all his entities, we figured that the requested information and financials were necessary to assess the claim. We determined that the requested financials were essential to working out his “income” at the time of application, pre-disability income, and income for benefit entitlement.
When we reviewed the financials at the time of application, we considered every possible add-back (e.g. distributions, income distributed for income splitting purposes etc.) to see if his “income” could support the payment of the two benefits together. And we were pleased to know that it could.
However, the client had signed a special provision stating that if he received income from any other insurance policy, the insurer would reduce the monthly payment so that the combined benefit does not exceed the amount on the policy schedule.
Outcome
Despite the provision, we persisted and argued, using our long-standing experience, that it should be disregarded, given the combined benefits still resulted in less than 75% of his “income” at the time of the application/pre-disability income. After going back and forth several times, our perseverance paid off. AIA agreed to backdate the benefit to Nov 2019 instead of after the first policy ceased paying the benefits in Feb 2022. This resulted in an additional benefit payment of 3.3 years of almost $300k, which was neither the intention of the policy (when it was taken out) nor the expectation when we were asked to assist.
Our clients (client and spouse) were initially shocked and then absolutely thrilled when they learned of the result we had achieved for them. They mentioned that the additional benefit payment would go a long way in resolving some financial issues they were facing in their business. They could now rest assured knowing that ongoing income would come in until age 65, providing their family with much-needed financial security during a difficult time. They couldn’t be more thankful for the work we had done for them that would have such a substantial impact on their lives. It was truly gratifying to know that we could provide them with the much-needed support so they could focus on their family, his health and potential recovery.
This success story is a testament to the value of having an expert on your side when it comes to insurance claims. If you or someone you know is facing a similar situation, don’t hesitate to contact us for assistance.
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