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Build financial resilience and lock in your clients’ health while you can

Build financial resilience and lock in your clients’ health while you can
18-08-23 / Sisanda Ndlovu

Build financial resilience and lock in your clients’ health while you can

Durban - In a tight economy, many South Africans are faced with tough choices, and it's common for some to consider cancelling their life insurance policy before letting go of other expenses like their TV subscription. However, according to Bidvest Life's Chief Product Actuary, Nic Smit, safeguarding their earning ability and financial resilience is paramount for their wellbeing and that of their families, particularly in uncertain times.

A crucial aspect often overlooked when considering insurance cover is "future insurability". Future insurability ensures that your clients' insurance policies remain adaptable to their changing financial needs throughout life, even in the face of health changes or past claims. It grants them the flexibility to customise their cover according to evolving circumstances, ensuring they have the protection they need, no matter their life stage.

“Effectively, you’re locking in your clients’ good health while they have it, before cover becomes unattainable,” says Smit. Clients who have a future insurability option can increase their cover, add new benefits, or utilise conversion options without the need for medical underwriting. They can also use multiple options at the same time, which allows them to tailor their cover according to their specific needs without any limitations.

Consider the story of a colleague who acquired a small amount of cover at 30, assuming she could easily increase it later given she was young and healthy at the time. Unfortunately, a chronic illness diagnosis six months later left her uninsurable and unable to adjust her cover accordingly. “If she had future insurability options, her financial planning would have been drastically different, allowing her to secure the necessary additional cover without medical underwriting, despite her changed health condition,” says Smit.

What should you be talking to your clients about?

As a financial adviser, you should be discussing critical options such as the Annual Review Option with your clients, which allows them to increase their cover on each policy anniversary up until their 55th birthday without medical underwriting. This option is beneficial for young clients experiencing salary increases or promotions, says Smit.

Additionally, the Change In Circumstance Option allows policyholders to increase their cover by up to 25% on events like marriage, childbirth, or property purchase. This option remains available even after claim or if they were originally accepted on a policy with an exclusion or loading due to their health. In those cases, it’s even more important to have an option to change cover without requiring further medical underwriting.

Lastly, there's the Future Cover Protector (FCP), an essential option to select when first applying for cover. FCP permits policyholders to increase their initial cover by a certain amount without medical underwriting. This option is valuable for clients who need to make significant increases to their cover. Additionally, clients who are 35 or younger when their policy commences can use FCP to add life cover after policy commencement even if their policy had no life cover originally. This is a great option for young people who typically need income protection as soon as they start working but only need life cover later once they have debt or dependents.

By providing your clients with the flexibility to customise their cover with their life's journey, you're ensuring they have the financial durability to see tough economic times through, and protect their loved ones' future.

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