The Science and Emotion Behind Trauma Sum Insureds

Is there a right way for calculating the appropriate sum insured for trauma? Do you have a rule of thumb based on a multiple of income or a formula for removing debt? Or is there a science to our art whereby we can combine the emotional fall out and the true cost of disease to determine a sum insured? Trauma cover, cover that provides a lump sum payment to assist an individual navigate through the treatment of a serious illness and focus on getting better not the stress of the financial strain, is where and when a quality adviser led insurance process is invaluable.

When my sister was diagnosed with a menigioma (a brain tumour that grows between the skull and the brain) there were a few things going for her:
• She’s a doctor and very quickly she had the best physicians around her
• It was thought to be benign
• It was operable
• She had income protection and trauma insurance

However what she had not had, was: advice. The policy for trauma did not make a payment. The income protection cover was inadequate relative to her salary at that point in time. Only through excellent financial advice post surgery was she able to maximise her income protection claim and secure an appropriate level and breadth of cover for income protection and trauma for the future.

As an adviser I worked with a rule of thumb for trauma. My best and most desired position was a sum insured that allowed for the removal of debt and the provision of one years income. My least favoured but lowest sum insured I would recommend was at least half a years income for the sum insured. Was this appropriate? That depends on the discussion I had with the client and their understanding with my guidance of the risks and outcomes.
Looking at the cost of disease in time and money provides some science to the process of calculating sum insureds. The Health Funds of New Zealand December 2013 report on the time of work due to sickness found that:

• An average of five weeks per person is being lost from the workforce as a result of surgical waiting list back-ups.
• Many thousands of New Zealanders waiting for surgery are having to take extended time off work, and also need loved ones to do the same so they can take care of them.
• 280,000 New Zealanders currently needed elective surgery with the average waiting time from GP referral to surgery in the public system was upward of 224 days.
• Almost a third of those needing surgery reported experiencing significant pain and said they had had to make lifestyle changes.
• More than half said their quality of life had worsened, mainly due to pain and mobility issues but also due to the psychological and financial stress of their ongoing illness.

A Canadian study, (Cancer and Work: A Canadian Perspective, 2011, Canadian Association of Psychosocial Oncology) reminds us of what we know only all too well that Cancer is a complex array of illnesses that can bring a potentially overwhelming spectrum of physical, psychological, social, emotional, functional and economic challenges. The paper concluded that there are broad reaching effects of having cancer on an individual’s worklife. And sadly that the development in the field of vocational rehabilitation and is fragmented and limited, in part due to its infancy.

This is where trauma insurance cover becomes incredibly important. Not only is the sum insured critical to allow required surgery and treatment to take place as soon as possible whatever the choice of treatment the patient embarks upon, but that they can do so without financial stress and further that upon recovery they have the resources to undertake vocational rehabilitation that can address the impact of the psychological and emotional strain of the disease and recovery.

The costs of disease, the financial cost to the individual and family must be also taken into account. As an example when considering the impact of Cancer the individual may also incur financial and economic costs, which are often overlooked when considering the impact of the disease (Cost of Cancer in NSW, 2007, A report by Access Economics Pty Limited for The Cancer Council NSW). This report found that non-financial costs are also very important – the pain, suffering and premature death that result from cancer. Although more difficult to measure, these can be analysed in terms of the years of healthy life lost, both quantitatively and qualitatively, known as the “burden of disease”.

Their detailed analysis found that, individuals bear around 40.4% of the total cost of cancer, with governments (42.1%), society (16.1%), family and friends (0.8%) and employers (0.6%) sharing the remaining costs. In regard to a dollar figure, the finding was this: that the total expected lifetime economic cost of cancer per person is around $966,000 – of which the burden of disease is $851,600 and the financial cost is $114,500.

Applying the 40% ratio does that provide a sum insured of $386,000? Perhaps, there’s a science to that calculation. Does it match up against my old rule of thumb? In some cases it far surpasses it, whilst in others it falls short. What it does highlight is this: that not all diseases are the same, in fact this Cancer Council report found that brain cancers can be double the calculation above. Not all the impacts on an individual are the same. Psychologically my sister was well prepared, was financially stable and had a good support network. Should these factors, those emotional input,s be part of your fact find and deliberations in determining a sum insured? Perhaps.

What all of this, points to is the value of advice, the matching of the art and science behind providing an insurance solution for a client. As the cost of cancer as an example, increases, as people live increasingly complex lives within complicated family structures, the value of a trusted adviser to shape solutions, bespoke solutions, has never been more important.

Business Plan Template : A Guide to Pro-Active Client Engagement

So the end of the year is nigh and if you are really serious about making 2013 a success, then it is highly likely that you have already thought about your key client engagement plans for next year and quite possibly planned out the first three months of 2013.

No?

What are you waiting for??!!!

Imagine ending 2012 knowing exactly what the next twelve months looked like from a client engagement point of view in regard to a series of set plays.

Activity and responsiveness are of course key, but having a structured plan to support your day to day, business as usual activity can provide a clarity and preparation that your competitors just have not got around to doing.

The attached template is not an answer to your client engagement dreams but what it is, is a simple yet powerful tool to illustrate just how well planned your year is, or conversely highlights that your client engagement planning is not up to scratch.

So in 2013 give yourself, your team and your clients the gift of leadership, pro-activity and positive client experiences that will should you be disciplined enough to follow through deliver success in 2013.

You can access the template from the attached link.

Closing Sales Questions That Matter - Managing Client Sales Psychology

It's time now to take your closing skills to the next level.

You can only use the techniques we'll talk about today in engaging your clients in the sales process to provide fantastic client outcomes if you have successfully and expertly identified:

- the areas of the clients financial and insurance solution that are lacking, and these have been clearly identified to the client and importantly to the referral source that ideally these clients have come from due to the success of the use of the wealth management index questions (as dicussed in our early posts)

AND

- you have engaged the client on a psycho-emotional level and discovered invaluable information about how they feel about specific areas of their lives, how they rate those aspects now and what they would like to see in the future around those specific areas

AND

- you have explored what success looks, feels, sounds like to the client and what are the regrets the client would have should time escape them and they do not fulfil their dreams

By doing this you would have positively engaged your clients in a manner and depth that few sales professionals in financial services do.

You would have clearly differentiated yourself from competitors and you would have developed an incredible level of rapport as a consequence of taking the time to understand your clients values and showing respect towards those values.

THIS DOES NOT MEAN THAT YOUR PROSPECT / CLIENT WILL BUY FROM YOU.

You now need to make a great attempt at pre-closing.

After you have followed all the above you have earned the right to ask questions about the clients final decision making process.

The range of questions you need to ask will cover:

- the types of financial and insurance decisions they have made in the past
- how and from whom that advice was delivered
- the experience the recollect in the delivery of that advice - their perception
- what stage they are at in the buying process
- what stops them making decisions
- who do they involve in the buying process decision - which voices do they listen to including the ones in their head
- what they expect from you


All of this combined with what you have learnt, from using the techniques we've discussed previously, about how they process information, will enable you to make the pitch of your life and win the deal.

And if you don't view every client presentation of the solution that you have invested so much time, education, professionalism and emotion is as the pitch of your life......the client/prospective client will know that.

After all what you do on a daily basis is make the lives of your clients better ....that's worth getting passionate about.

Follow Positive Client Engagement over the next few months and we'll show you how to deliver the best pitches possible.

Till next time