Advisers have a ‘duty of care’ – Financial Planning

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.

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