Introducing John
Retail Term Life Policy: $1.2 million with 5% indexation
John*, 65, was no longer working and was struggling to afford his life insurance premiums on top of his medical bills, having experienced chronic health conditions over the last five years. John had committed to cancelling his cover and had let his financial adviser know of his decision.
Role of John’s adviser
As an alternative to cancelling his cover, John’s adviser explained the iExtend offer and then pre-assessed John for a potential co-ownership arrangement. Due to his changing health, John met iExtend’s eligibility criteria. With the benefit of John’s adviser’s guidance, he decided to co-own all of his life insurance policy with iExtend allowing him to keep some of his cover without paying any future premiums.
Role of iExtend
iExtend co-owned the policy with John. In return, iExtend paid all future premiums on John’s policy, including the yearly indexation increases.
12 years later, after co-owning the policy with iExtend
John suffered a sudden heart attack and passed away. A claim was lodged on his policy, which was successfully accepted by the Insurer. Due to indexation increases on the policy over the 12 years of co-ownership, the cover amount of the policy had increased to $2.052 million at the time of claim.
So, instead of receiving no life insurance payout – as would have been the case if he had cancelled his cover – John’s nominated beneficiary (i.e. the person that John had nominated to receive his portion of the life policy proceeds) received 10% of the $2.052 million, which was $205,240.
* The content within this case study serves as an educational and illustrative example. To ensure confidentiality, certain details such as names and health conditions have been altered. The indexation rate may be fixed or vary yearly if linked to CPI (Consumer Price Index) or some other indexation factor set by the insurer.