VIPA Loss of License Insurance. Godsend or scam?
I am unconvinced of the merit of the VIPA loss of license scheme. Reading from the VIPA flyer and the Product Disclosure document (PDS) the following are my observations.
For a VA Cruise FO salary near enough $60,000.
Benefit for Total Disability : 85% of salary = $51,000 per annum for up to 3 years (total $153,000)
A further sum of $102,000 payable after the loss is deemed permanent at the end of the previous 3 year period.
Total payment $255,000.
VA cover the CRFO with a policy that would payout 4 x salary ($240,000) in the above circumstances.
Clause 2.11 of the VIPA PDS states that “any benefits payable” will be reduced by “all income” paid or that the insured is entitled to from various sources including “other policies” and “superannuation trustees”.
Given that a lot of superannuation policies (eg Sunsuper) have a loss of income function, the disabled CRFO could have a payment due from a super policy.
With the $240,000 payment from the company policy and any other payment from super to be deducted from the VIPA payment, there is at best $15,000 total, to be paid to the CRFO from VIPA. If he has an income function on his super, this will be further reduced and probably become a negative figure.
Further I notice that under the definition of “total Disability” clause ii) imposes a requirement that the insured may not be working in ANY undertaking usually performed for wage or profit. Therefore if he has any other job on the side to keep bread on the table during his disability, he will get nothing from VIPA.
In the event that the unfortunate, dies rather than just being disabled, there is no payout, his family will get nothing, the way the PDS is written, as there is no provision for any death benefit.
For a VA FO or Capt. the situation is better, but not by much, as the company is covering him/her for a substantial sum, which must be offset. For VB Capt’s and FO’s the actual VIPA payout will not be reduced by the presence of a company policy and they get reimbursement for the premiums they pay. According to the VIPA brochure, The VB Capt may be paid up to a total of $760,750. For this he will pay the same as the VA CRFO who will be lucky to see any payment from the policy.
For half the VIPA premium, the CRFO could get LOL cover for $550,000 plus an additional $100,000 death cover. (total payout for death $650,000) from another provider.
Would someone from VIPA be inclined to, publicly, explain where I am mistaken in my calculations or interpretations.
Scam Sniffer