Advisers have a “duty of care”

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In 2011 two of John Murdica’s long-term life insurance clients, a couple in their 60’s, came to him and said they wanted to cancel their policy. They were going through financial difficulty and couldn’t afford to pay the premiums, plus didn’t think they needed the insurance.

Murdica, who is the practice principal of Retire & Wealth Planners, said he was not only disappointed, but concerned. He knew both of the clients had heart conditions and tried to convince them to retain some sort of cover, but they decided against it and let the policy lapse in September 2011. For an unknown reason the policy didn’t lapse until January 2012, but Murdica knew that due to their prior health issues the couple would not get cover again. In February last year, one of the clients was diagnosed with bile duct cancer – a cancer that has a five-year survival rate of 30%.

“I obviously was shocked to hear about the condition and was told how potentially terminal it was, so I decided to take it upon myself to contact the insurer. Basically I emailed them the case history and so forth, and asked if they would consider a TPD (Total and Permanent Disablement) claim.

 “Given their recent health issues that I knew they had and their financial situation, which I wasn’t aware of fully… I just felt that something needed to be done to help. And I’m glad I did.”

Without much argument from the insurer, Murdica was pleased to call the clients and tell them they would receive about $189,000. During that time he was only employed as their insurance adviser, but in July 2012 they engaged him as a financial planner. Murdica was then able to arrange the Centrelink disability support pension as well as health cards to help with the cost of medication.

The husband said he hadn’t even considered the insurance claim, and would be grateful for any help because he would have to give up work to look after his wife. “He was resigned to the fact that he would stop his business and care for his wife…From a piece-of-mind point of view they know they’ve got money there now.”

The key thing that Murdica took away from the experience, that he says other planners should remember, is “the importance of not giving up”.

“We have a duty of care to our clients to at least investigate what, if anything, we can get for them.”

Murdica’s story has inspired other planners; one planner in his dealer group told an older client to get a medical before cancelling their insurance. The client did, and found that she had a serious medical condition.

“There are not enough good news stories out there. The media’s been hell bent on bashing us, as if we were responsible for the global financial crisis. Most of us do good for our clients and try to improve their situation and I thought this is something where the planner and the institution – the insurer – has actually done good by a client. There’s numerous stories like this that just don’t come to light,” said Murdica.

  • Gary C on 12/03/2013 2:46:32 PM

    Hey the interests of getting our facts right and given you work for industry funds, perhaps you can tell us how much the industry funds have spent on advertising to continually bag us and flog the industry product.

    Many of my clients, who are industry fund members,would also love to know where the funds have come from...members contributions?...fees levied from members accounts?....sequested fund growth?

    We have asked David Whitely, but he is not keen to discuss it.

  • Old Fella on 12/03/2013 1:09:54 PM

    Cyndy, If you read the insurance terms of most Industry Fund's PDSs, you may be surprised to find that pre existing conditions are actually excluded, but only at claim time, when the underwriting is really done. By example, it is possible, even likely that if you die from a heart attack, but had high cholesterol at time of joing the fund, your dependent's chances of getting paid an insurance benefit are really quite low.

  • Stevie V on 8/03/2013 11:48:45 AM

    PS- There are many business super packages which will provide defauilt cover without medical questionnaires. We have one for our staff through Spectrum, which gives everyone $200K death cover with no questions. So please do your homework before shooting your mouth off.

  • Stevie V on 8/03/2013 11:46:16 AM

    For so long now industry funds have, through inuendo, been insinuating about the advice industry. "We don't pay commissions to financial advisers". Well you don't provide advice either. Proper broad ranging advice is a separate cost for an industry fund member. That's not highlighted in your advertising is it? Every day good 'comprehensive advice' saves people $0,000s in tax, helps them maximise their social security entitlements, protects their families through proper wealth protection strategies, ensures their estates are managed according to their wishes and stops them from making really stupid investment decisions. Where does that figure in your one eyed escalator comparisons? Far from being the answer your movement has done Australians a great disservice by inferring that advisers have something to hide, or that something shady is going on. Because of your movement many people won't go to advisers now and fall prey to product floggers like yourself. You go back to your job and let us do the advising.

  • Pat on 8/03/2013 8:49:06 AM

    And Cindy, your petulant little post seems to perfectly embody the attitude portrayed by industry funds.

  • Pat on 8/03/2013 8:48:14 AM

    Cyndy, apart from the insurance experiences posted above, we will continue to "bag out" industry funds whilst their administration is so woeful. Trying to extract information, trying to rollover monies from industry funds and trying to administer changes to insurance are all examples that our firm has experienced in which industry funds badly lag other funds. Everytime we have a client with an industry fund, we dread having to approach them for information.

  • Cyndy on 7/03/2013 4:13:00 PM

    I am so sick of you bagging out the industry funds - so they are not perfect but they are the only ones that will provide EVERYONE with a default level of cover with NO medicals and NO pre-existing conditions, I particulary know of one fund that will potentially provide you with up to $1mil of cover with no medicals! and you have to opportunity to FIX that cover so it doesnt reduce - which quite a few funds offer as well if anyone would bother to read the PDS they would know. I work for industry funds and I can tell you a few good stories about our fund paying the member the TPD payout and the member not even knowing that they had it - plenty of people out there dont know they have insurance cover and wont go to a private financial planner to get advice so are you saying tough luck to them?? I say thank goodness for industry funds that at least offer the cover as default. Get your facts right and stop whinging and get on with your jobs

  • Stevie V on 7/03/2013 12:58:29 PM

    Don't get me started about the Industry funds dropping peoples cover due to age. I have a client who couldn't possibly get cover elsewhere, so we ended up leaving some funds in an existing industry fund to maintain the Life & TPD cover and then the next anniversary they dropped the cover right down anyway. When you read this article it highlights the unsung benefits of having a good adviser. The constant harping on about fees and commissions is doing consumers a great disservice. In this instance the adviser went the extra mile for his clients and I dare say all of us have done that from time to time. I've got clients who can't get up my office stairs and I go out to see them in their homes. I don't charge them any extra for this as a matter of fact in most cases I've discounted the standard fees. Let's see the ISN do anything like that. All we hear is someone harping on like a reincarnation of Goebbels's parrot. Why doesn't he put a sock in it?

  • Mervin C Reed FAICD on 7/03/2013 11:28:34 AM

    I agree with John that you do not give up. The ISN should publish the facts that most of their Life insurance covers decrease with age so if the client expects cover when they are 50 year plus then they are going to be sadly mistaken. No advice and bad product and they add to the under-insurance and costs to Government ultimately.

  • Paul on 7/03/2013 10:27:54 AM

    I think every adviser would have stories like this. I know we encounter situations like this every year and we're not a huge risk writing business. The most common one being people giving up work for health reasons and not thinking to claim on their TPD.
    Let's keep them coming.
    Well done

  • Riggles on 7/03/2013 10:26:33 AM

    ISN bigots David Whitely and cohorts shoudl read this before continually carping and whinging about banning commissions in a segment of the Industry that they dont operate in, but obviously feel that they should beome law makers and drive their conflicted agendas.
    The ISN (and I have seen it) are total amateurs when it comes to Risk Insurance. Whe a simple death claims remains unpaid after 12 months for no other reason than "we have'nt had time to get around to it" They should tidy up their own backyard, before criticising others

  • PeterFowey on 7/03/2013 11:42:10 AM

    Well said Riggles, Ihave been in the industry for 30 years, i stupidly asked my wifes industry fund ( one of two funds she owns) to increase her life cover, firstly they wanted a medical and sent her to a specialist who had passed away, like two years prior, ??? then sent her to a doctor who had moved offices ( some 12 months prior) when they did get thier act together it was some 9 months later , a letter arrived to say that they were proud to announce that the additional cover was approved, pity was it was underwritten in her retail fund with a faxed personal statement( cloned from there docs) and done in 72 hrs , amazing, and the retail fund turned out to be 3% darer , small price to pay for service, what about Mr X , he purchased a full blown wistle and bells IP contract from me , asked his industry fund to cancell his 2x2 salary continance fund , firstly he had to prove the new fund was better featured, ??? then they would consider his request !!!!! , well that was 5 years ago and he's still waiting and making telephone calls , Aint life grand .....AND WE ARE THE ONES THAT HAVE TO BECOME PROFESSIONAL LOL

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