How often do you hear or read the words "No salesman will call"? The inference is that a salesman is a bad guy who will con you into something that you don't want.
Well interestingly, when it comes to life and health insurance, the so called consumer advocates would have you believe that the broker or adviser (salesman), who is paid by a brokerage or commission if he/she arranges life and/or health insurance for you, causes the cost of that insurance (called the premium) to be more expensive than it need be.
On careful investigation however, we find that life and health insurance arranged directly with an insurer, i.e. responding to advertising, internet, etc, is no cheaper than the equivalent insurance arranged by the broker/adviser.
The simple fact is that people don't generally approach insurance companies to get life and health insurance! Sure, it happens occasionally, but not in sufficient volume to make an insurance company viable. Sadly, human nature means that it is difficult to contemplate one's own death, or to contemplate the world without you! So, as it is no less expensive, i.e. it costs you no more, to arrange your insurances through a broker, you get his or her services at no extra cost, it makes sense to use the skills and experience of a broker or adviser. (This sentence to go into previous para)
This means that for the great majority of us, we need someone to point out the financial implications of an untimely death, illness or injury, and then to quantify them, and to offer appropriate insurance solutions. That someone is your life and health insurance broker, or financial adviser.
Sure, you can buy insurance over the phone or the internet, but, when it gets to claim time, and the insurance company declines the claim, for whatever reason, who is going to go to bat for you? This is the time when the broker/adviser becomes invaluable.
To illustrate the value the broker adds, let me relate a true story with names changed to preserve the privacy of our client. Mike is a successful business owner. Against his wife Steph's wishes, he asked us to arrange Disability Income Protection insurance for him.
Some eight years later, after a stroke induced by a chaffing of a seatbelt on his neck, Mike had cause to claim on his Income Protection insurance. The claim went well for about two years and he was making exciting steps in his recovery. Mike's policy provided that he had to prove his loss of income as a result of his injury/illness, and as he is a business owner, that loss couldn't be proven until after the company's annual accounts were prepared. ACC had accepted the claim, so the client had regular income from ACC and the insurer during the year, and then the top-up at year end received a top-up based on the company's financial performance (profit).
The calculation of this top-up, whilst not complicated, was mis-interpreted by the claims office at the insurance company when they paid him the top-up. We saw the calculations in their letter and recognising that there was an error, approached the insurer. They asked that we make our submission in writing, which we did.
Two days later, they agreed that their reading of the policy wording was wrong, and they credited his bank account with the shortfall of $63,000.
This is not an unusual story - we have many on our files. The calculations for income protection claims can be complicated, and we have found that, with no intent to short pay, the insurer has, on many occasions, inadvertently short paid. Our experience and systems we have set up to check the calculations, have meant the difference of hundreds, and occasionally thousands of dollars for our clients.
These experiences illustrate the value that a professional life and health insurance broker or financial adviser adds!
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