Disability Income - Case Study
Background
Mark, together with his wife June, was a Director & Shareholder of a small and successful communications company.
The Event
Mark at age 27 was taken ill in 1994 and was unable to work.
The claim involved Disability Income cover and the insurer accepted the claim although it was some time before the correct diagnosis of Chronic Fatigue Syndrome was confirmed. Unfortunately the recovery can take a long time or sometimes never.
The business was attractive to a competitor who paid a good price for it, which is not the usual outcome in such circumstances.
The Process
Over the subsequent years we have been active in ensuring that agreement has been reached with the insurance company over the degree of part time work. This has at times involved significant negotiation. While the policies are comprehensively worded, it is impossible for them to clearly spell out every possible variation on each insured illness.
Recently Mark and June decided to establish a new business that will allow for flexible hours and involvement suited to Mark’s continuing health issues. We instructed an insurance Actuary (actuaries assess the risk and cost-benefit ratios of insurance policies) to calculate a final payment on a lump sum basis. Subsequently we negotiated with the insurer a fair settlement that is tax efficient.
Mark has received payments in excess of $600,000 over a 10-year period. This has replaced his lost income and allowed Mark and June to establish another more suitable business.
These payments, without our timely and ongoing involvement would have been substantially less or may not have occurred at all.
