Saturday, February 9, 2013

Case Study: How you can be protected from the effects of critical illness.

Although the names have been changed, this case study about Justin and his business is a real life case from our archives. It helps to highlight the impact that having robust, accurate advice and insurance made when Justin, the company’s managing director, was diagnosed with a terminal illness. It also serves to highlight the impact and necessity of a good, specifically tailored insurance plan can protect your hard work when unforeseen events arise.
  •          Justin held the key position of Managing Director of ABC Engineering, a Wellington based company specializing in production services.
  •          ABC Engineering employed a total staff of sixteen workers, and had an annual turnover of $3.9 million.
  •          Justin’s role also encompassed establishing and maintaining critical client relationships. A large portion of the company’s income was directly attributed to Justin’s relationships with several major clients.
  •          The company had estimated the amount of time needed to effectively replace Justin’s critical business role at six months.

The Disability Claim
When Justin found himself unable to work due to his illness, his salary from ABC Engineering was discontinued. In the absence of the specially configured protection from Spratt Financial, he and his family would have found themselves unable to support themselves through their trying time. Thankfully, Justin had enlisted us to provide him with protection, and our tailored cover ensured that:

  •          A disability claim was paid after only four days for five weeks (hospitalization benefit) and was started again after seventeen weeks, at the end of the waiting period.
  •         A personal income of $9,250 per month was paid to Justin so that his family was supported financially.
  •         No financial evidence or complicated procedures were required for the claim.

The Trauma Claim
Within 26 days of initial exploratory surgery in July 1993:

  •          ABC Engineering received $350,000 which cleared all critical debt, covered revenue for three months and provided recruitment costs.
  •          Justin’s family received $160,000 which cleared all debt and created an income reserve of $56,000.

The Permanent Disability Claim
21 months into Justin’s ongoing illness:

  •          The business received $550,000, which gave them capital to reinvest into maintaining their competitive edge in the marketplace.
  •          Justin’s family received $150,000 which safeguarded his daughter’s education and provided a significant cash reserve for his family.

Terminal Illness Claim

  •       ABC Engineering received a further $300,000, creating further revenue for the business.
  •       Justin’s family received the remainder of its entitlement; $1,026,000 in total, which paid financial expenses, professional fees and created a significant capital reserve for family income.

During that time, and to this day, the following people kept their client, ensuring that that the benefits of our protection extended outside of even Justin, his family and his business:

  •          Justin’s accountant.
  •          Justin’s solicitor.
  •          Justin’s financial planner.
  •          Justin’s bankers.

The insurance that we provided formed a key part of ABC Engineering’s survival plan. Because of the protection we tailored, Justin’s company was able to command its own destiny by being able to control debt and having the funds allocated to protect the future prosperity of the business. The key point about this case is the benefits that having a tailored plan extended not merely to Justin himself but to his family and to his entire business and employees. At the end of the day, we were happy to help and even happier to see that what could have been a calamitous time was made easier for Justin, his family and his business.

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