Insurance planning produces a happy ending

Couple preparing for retirement relieved to have appropriate insurances to avoid financial loss following a prostate cancer diagnosis.

Bill and Mary were age 55 and had been working with our firm for over 10 years in preparation for their retirement, which is planned for age 60. The children had all graduated from school and were either now at University or working full-time in their chosen professions. Bill and Mary were concentrating on their superannuation portfolios and maximising their contributions into these accounts each year together with increasing their savings. They owned their primary residence outright and as a result we were actively able to reduce their life insurance sums insured over the past few years. Income protection policies were maintained in case either of them suffered temporary health issues prior to retirement.

However, at an annual review meeting they mentioned a change of plans. Bill and Mary, after deep consideration, had decided that their retirement plans would see them living in the rental property at the Sunshine Coast, but they would also like to maintain the family home in Brisbane. Whilst this may not be a long-term plan, they felt that this was suitable in the short-term, especially while some of the younger children were completing their university studies.

They also liked the idea of retiring at the Sunshine Coast but if their children were to be raising families in Brisbane, they would possibly like to have a primary place of residence in both cities. Currently the Sunshine Coast property had a tax effective mortgage that was to be paid off before finishing work. If not paid off, they would use some superannuation to finalise the loan.

The issue though, was what to do if there was a severe illness before retirement?

Income protection would help, but there would almost certainly be a shortfall in family cash flow. The solution was to take out a trauma insurance policy sufficient to eliminate the remaining debt. This form of cover provides a tax-free lump sum in the event of specific events such as heart attack, cancer or stroke.

The policy was only to be kept in place until retirement, at which time the superannuation would be accessed.

Only eight months later Bill was diagnosed with prostate cancer. After providing the histopathology results to the insurer we had Bill’s tax-free lump sum (which was equivalent to their Sunshine Coast mortgage) paid into his account within 12 days. His income protection was also payable immediately. Bill’s claim payment allowed them to eliminate the mortgage immediately. Importantly, it also provided Bill with the peace of mind required to beat his cancer. His entire drive through this period was to beat the cancer and then consider retirement prior to age 60.

We are pleased to advise that Bill has made a successful recovery.