Giving your clients the best cover means asking the right questions

With numerous life insurers offering a wide range of benefits, finding the best products for your clients can be challenging. After completing a thorough Financial Needs Analysis (FNA), the next step is a comparison of the available products to single out the best solutions. This goes beyond just comparing prices; it means ensuring that the products meet your client’s real needs and risks.

According to Mark Neil, Chief Distribution Officer at Bidvest Life, when comparing quotes and differentiating which life insurer has the most comprehensive cover that offers real solutions that meet their clients’ expectations, financial advisers should ask themselves insightful questions regarding product features they might not previously have considered. 

When comparing different products, what questions should you be asking?

Who qualifies for a 7-day waiting period? In 2023, 42% of the income protection claims that Bidvest Life paid on a 7-day waiting period were for periods of disability that lasted 30 days or less. This means that 42% of the claims paid on a 7-day waiting period would not have resulted in a claim had the life insured selected a 30-day waiting period. Consider how your clients earn their income. Whether they own a business, are self-employed, are employed in a traditional structure, are independent contract workers or commission earners, do they qualify for a 7-day waiting period?

Are common cancer risks covered? One in 26 South African women will experience breast cancer in their lifetime. Check for comprehensive cover for breast and cervical cancers, and query whether breast reconstruction is included. One in 15 men have a lifetime risk for prostate cancer but most insurers only start paying from stage 2 (T2) or T1 if the Gleason Score is more than 7. A product that pays from stage 1 (T1a) and does not require a Gleason Score as part of its definition ensures that your client’s real risks are covered.

Does the product address critical illness shortfalls? Traditionally, income protection does not cope well with the intermittent periods of disability commonly caused by critical illnesses. Claims on most temporary income protection benefits in the market are triggered by occupational disability, meaning they terminate when the person is deemed fit to return to work. In the case of a client who is diagnosed with cancer and is undergoing intermittent treatment, they would only receive a portion of their income if they continued to work part-time during this time. In most cases, this would leave them unable to take time off for mental and emotional recuperation. 

In addition, the payout on income protection does not cover unexpected additional monthly expenses like changes to diet, specific medication, and travelling to and from treatments. This is where a benefit like Critical Illness Income (CI Income), which guarantees uninterrupted monthly payments for up to 12 months on diagnosis irrespective of whether your client continues working during treatment, would meet their real needs.

Take Bidvest Life policyholder Nandi* as an example. After her Stage 3 breast cancer diagnosis, Nandi underwent a double mastectomy and breast reconstruction. Her policy provides her with three benefits so that she can focus on her recovery instead of worrying about lost income: a lump sum payment of 100% of her sum assured on diagnosis; a monthly income for the 12 months post-diagnosis through her CI Income benefit; and an additional 15% payout on her Critical Illness Lump Sum (CILS) benefit (over and above the 100% of benefit already paid) specifically for her reconstructive surgery.

Is there a Commutation Option? Many people view lump sum disability and income protection as substitute benefits – if you take enough lump sum disability cover you don’t need income protection, and vice versa. However, this view is inaccurate as income protection benefits pay out for both temporary and permanent disabilities, while lump sum disability cover only pays out for permanent disabilities. Being able to add a Commutation Option (which enables clients to commute a portion of their monthly payout into a once-off lump sum on permanent disability) to an Extended Income Protection policy ensures that your client is covered for both temporary and permanent impairments, but still has access to a once-off lump sum in the event of a permanent disability.

Are children covered? When a child is diagnosed with a serious illness or disability it takes a massive emotional toll on the family, not to mention the financial burden that accompanies a critical illness diagnosis. A critical illness policy that automatically covers a policyholder’s children will assist with the additional costs required to provide for the needs of these children during this difficult time. Policyholders should also have the option to add life cover for their children – and their spouses – to their Life Lump Sum benefit.

Does the product provide for dependents in the long-term? Traditionally, life insurance pays out a lump sum on death. However, while lump sums are ideal for settling once-off commitments, like debt, executors’ fees and estate duties, they are not without risk: Calculating a lump sum amount is subject to assumption-based risks, and behavioural risks after payout cannot be safeguarded against. A Life Income benefit provides nominated beneficiaries with a monthly income stream, ensuring that a client’s family has a consistent source of financial support after the client’s death.

Are changing circumstances allowed for? Automatic future insurability benefits provide a degree of flexibility as a client’s insurance needs change. The drawback is that these benefits may not necessarily align with the timing of the changing needs, leaving your client vulnerable to gaps in their cover. A product like Future Cover Protector ensures that a client who anticipates significant changes in their insurance requirements at specific points in time, independent of policy anniversaries or life events, can make the necessary updates and additions free of medical underwriting.

“Financial advisers have ethical obligations to prioritise their clients’ interests, and to make recommendations that are aligned. This means interrogating the various life insurance products to identify which ones solve real problems and deliver tangible value, rather than choosing from a bucket of similar products whose only real differentiating factor is price,” says Neil.