The (actual) cost of missed protection - Heidi Loughlin's story

In an article last week, I revealed that a case study involving Cura protection adviser Krystle Skelton and a client (Mrs L) was in fact the cover she would have offered for Heidi Loughlin [pictured] before she was later diagnosed with an aggressive form of breast cancer.

Read Part One

Unfortunately, however, the sad truth is that she wasn't advised by Krystle, she was advised elsewhere to just get life insurance. This means that for now, she has no insurance policy to help herself and her family during this time.

When we give recommendations we are looking at a person's life now and planning for events that we hope will never happen. The reality is that these events do happen, and when they do the effects can be devastating. Heidi is proof of this. I have been lucky to see her speak and see her passion to get across the message: don't be like me, make sure that you don't miss out on these insurances.

It feels awful to lay out all of the claims that Heidi has missed out on. It feels like a terrible gameshow, where they show you what you could have won, dangling the prizes in front of you and then whipping them away. But, Heidi has been amazing in giving her full support to share this to help show us as advisers why we should not walk past protection, or just opt for the easy route.

Something that strikes me is the critical illness cover. I think the instinct for the critical illness cover is to repay the mortgage, after all that is what the policy would originally be intended for. But that doesn't have to be the case. Heidi and her husband may have decided to use this money to pay for her treatment privately, once the NHS funding stops. The NHS will stop funding this treatment, it is very expensive (around £90,000 per year) and they will only pay for a few more years.

The critical illness payment could be used to pay for over a year's worth of life-extending treatment for Heidi. That is more time with her boys.

By including the family income benefit too, this would have given her husband the added security of knowing that he had funds to continue repaying the mortgage, when she passes away. This could potentially add to their decision to use all or some of the funds from the critical illness claim, to pay for Heidi's treatment.

Heidi and her husband would also have been able to place a claim on the policy when their new-born daughter sadly passed away. No amount of money can ever make this situation ok. When a parent is facing the task of planning their child's funeral, these funds can take away the additional stress of finding money to pay for it. Any extra left over can be used for things like counselling for the whole family.

In another five years

If Heidi's treatments are stopped by the NHS she will most likely be able to receive a payment from her life insurance, through the terminal illness section. This may be used to pay off the mortgage which will mean that her husband has the comfort of knowing that the family home is safe.

Heidi and her husband will need to think about how they plan to fund her funeral. Her husband will also need to consider what will happen to the household finances, with Heidi's monthly pension being transferred but significantly reducing, the money from her speaking engagements ending and a new need for more childcare support.

This is where the family income benefit truly stands out. Going back to Mrs L for a moment, we "arranged" family income benefit on an increasing basis. This means that for the next 11 years Mr L will receive £572,187 to raise their boys until they reach an age of independence. That original £2,500 per month family income benefit may not have seemed like much, but it offers a lot of protection.

This could help him to reduce his hours at work to be with them more, without worrying about making ends meet. It could help him to pay for their hobbies, their education if they go to university, to carry on their regular living without feeling the financial impact of Mrs L's income being gone. It could help Mr L to keep a sense of routine and normality for his children, when their world will have significantly changed.

Why protection is important

The important thing is to have the conversation, to consider all of the potential options and make a recommendation that covers as many bases as you can to your clients. You can then help them to make an informed decision about what is right for them, whilst taking into account their budget.

And review their cover regularly. The job of an adviser is not to simply arrange cover and move on, you are making a commitment to that individual and their family to look after them. Their circumstances will change over time, which means that their protection needs and your advice will change over time.  Perhaps if Heidi's adviser had been in touch every year or two, the topic of critical illness cover would have come up before it was too late.

Heidi had this to say "When one in two people get cancer in their lifetime it is a no brainer to insure yourself. I spent £30 a month on my bloody cat's policy and those gits have nine lives".

How to start the conversation

At 11am on 6 August I will be on a Think Tank being hosted by iPipeline and British Friendly. I will be talking with Julie Greenwood, Emma Thomson and Stephanie Hydon about how to have difficult conversations.

I will be talking about how to approach sensitive medical questions; the tone and language to use, and how to look after yourself when you hear emotional stories. I will also be doing a bit of role play factfinding, to show some of things to do and some things to avoid when you are advising. You can register here.

Kathryn Knowles is managing director of Cura Financial Services

*Figures adjusted for the period of time passed. Decrease rate based upon 7%. Increase rate based upon 3%.

Premiums used within this article are correct as of 3 July 2020