In the context of this article, because of limited space, I will only be referring to income protection & critical illness and not TPD as I believe the latter is the subject of an article all by itself.

I believe the most powerful question you can ask in the first meeting with a single person is “What would you regard as your most valuable asset?” It’s important that you ask this question in the context of discussing their assets/liabilities.

Their answer was almost always related to a physical asset which I would record and then move on with my other questions. In the context of that particular part of the discussion, details will also have been provided of the person’s current financial commitments.

However, at an opportune time later in the meeting I would suggest to them that “your most valuable asset is your ability to earn income!” NOBODY ever disagreed with that statement.

In order to introduce the topic of income protection and critical illness insurance to a single person, I asked the question: “Q. How big an income reduction could you absorb in the event of your being disabled long-term?”

The normal response to this question was “what do you mean”? I would then say – ‘assuming that you were disabled yesterday for an indefinite period of time, how long would you be able to stay off work before your financial position was adversely affected?‘ The normal response was, ‘I would need to think about that. ‘

At that point in I would just record their answer and then, later, raise the question again in order to get them to think harder about an actual situation. Assume for example that the person had $9000 in liquidity (bank/shares) and outgoings of $3000 per month. The mathematical answer to the question would be that after three months his/her financial situation would obviously be affected.

I would get agreement to that fact and then ask the question – ‘what would happen after the three months and your actual return to work was still indefinite? ‘Whatever their answer was, I would say ‘is that what you would want?’

For example, “well, I could get an extension on my mortgage” –‘is that….want?’ OR “I could move back in with my parents” –‘is that …..want?’ (Is that what they would want?)

Eventually, they would say to me ‘well what would you suggest?’

My response: ‘let me show you what all my other single male/female clients have done in similar situations.‘ Then, it was opportune for me to introduce the topic of income protection insurance.

In relation to critical illness, let me share a favourite question borrowed from my good friend Godfrey Phillips – “In the event of your being diagnosed with a critical illness which, in turn, would have an adverse effect on your ability to repay the mortgage on your principal residence/investment property, etc., would you rather sell the mortgage or sell the principal residence/investment property?”

Obviously, that then triggers the question – ‘what do you mean? ‘– and a critical illness insurance discussion is underway.

In opening a discussion on the critical illness I mentioned “there are two main reasons for people affecting this type of insurance – debt reduction and preferred medical expenses.” However, if during the course of the discussion the prospect indicates that ‘wealth accumulation ‘is their #1 financial priority, I would add a third reason viz. ‘if your ability to maintain your wealth accumulation program should be adversely affected because of a critical illness, your insurance proceeds could be injected into the program to maintain continuity of growth. ‘

Sometimes in the context of suggesting BOTH income protection and critical illness insurance, a person may say to you – “if I’m off work disabled, and receiving an income protection benefit which could also cover the mortgage, why would I need the additional critical illness insurance?”

Here, let me defer to another good friend Peter Hartnell’s excellent response to this question: “could I suggest you use the capital sum critical illness to pay off your mortgage so that you can then try to adjust to living on 75% of your income!” (Most people can’t live on 100% of their income!)