What's not covered...
Treated like a criminal - for being disabled

Building a Booster Benefit that Make Sense - Indemnifying

It is a small mystery to me why booster benefits are designed to pay a client up to 100% of income for a period of three months after the end of the waiting period. Let's look at a really simple schedule of what might be paid for someone with a monthly benefit of $5,000, and a waiting period of 13 weeks. 

1 January claim event.

1 February $0 paid

1 March $0 paid

2 April - $0 paid - end of waiting period.

2 May - $6,666 - first payment (in arrears)

2 June - $6,666 - second payment

2 July - $6,666 - third payment (last with a booster benefit)

2 August $5,000 - and so on

All of which has little to do with the actual profile of financial losses to the individual - which can vary considerably based on the actual combination of employment benefits, ACC, and real costs incurred in the course of the disablement.

It is curious to me how the development of some parts of the same contract have taken very different turns.

Consider, for example, that lots of complicated off-sets can be applied to income: ACC, investment income, part-time income, and so on. Yet for this period, we apparently care not what the actual costs are of being disabled, and nor do we care whether the person had 89 days sick / paid or absolutely none. It might make a bit more sense to apply the principle of indemnity to this area of the policy as well. I am sure both clients and insurers would benefit.

 

 

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