By Petrie Marx, 12 May 2020
However, the pandemic’s unprecedented impact on the finances of myriad people means many are reprioritising and considering cutting cover completely. Sanlam is urging clients to rather opt for premium relief or a premium holiday during this time.
life insurance altogether means there’s no protection for individuals or their families should they be rendered unable to earn an income through disability or death. Amid a cash flow crisis, Sanlam is urging clients to seek advice and a holistic plan from trusted
financial planners. Petrie Marx, Product Actuary at Sanlam, says the Group’s intermediary partners are well-positioned to serve clients remotely right now, “South Africa’s economy is on its knees. People across the country are impacted. Financial planners can play a pivotal role in helping individuals view their situations objectively and make the best possible decisions in a very difficult time.”
Marx explains how Sanlam has adjusted its business to partner with clients during this time.
Sanlam remains open for business and continues to offer clients new cover. However, it has dramatically adapted its underwriting during this time. It will postpone all medical tests until it is deemed safe to conduct these again.
Applicants will be assessed in terms of risk, and those that meet certain conditions may immediately be issued policies, with the understanding that certain medical tests be done at a later stage. Applicants with a significant burden of disease will be deferred for further testing and will remain in new business queues until it is safe to conduct these. Significant cover amounts remain available, with an individual under 45 years old able to qualify for up to R12 million in death and
disability cover. With ‘riskier’ benefits like
severe illness and dread disease, clients can qualify for up to R2 million in cover.
Once a case has been issued, the client will receive full cover from day one. However, the terms may change after the medical tests are done, should the outcome of these be different from the initial underwriting assumption.
Step one should always be trimming the budget of unnecessary expenditure. Cutting cover should be a last resort – however, Sanlam recognises that many may need to reduce premiums.
To help clients avoid lapsed policies, Sanlam is offering cover flexibility, with corresponding premium reductions of up to 50%. The purpose of this provision is to help individuals work alongside their financial planners to reprioritise their risk cover needs over the short term, with the ability to increase their cover back to previous levels without medical underwriting.
Clients can reduce their life, disability and critical illness cover by half. They must do so before 1 July. Then, they have the option to increase their cover back to the maximum of what it initially was, within three to six months, with proof-free underwriting (in other words, no additional medical information needed).
Note that 50% of the benefit must be retained to recover 100% of the previous level. An example: A client who reduces their cover to exactly 50% of the previous level, can double their cover back to 100% of its previous level. But a client who reduces their cover to 40% of the previous level can still only double their cover back to the maximum of 80% of its previous level.
Another thing to be aware of: The increased portion of cover will be charged at the client’s current age and using the latest premium rates.
Sanlam recognises that many of its clients will simply have no option but to stop paying premiums for a while. Given this, the Group is offering a premium holiday option with free ex-gratia cover (ex-gratia means ‘by favour’ and refers to an action done voluntarily, out of grace, with no obligation from the recipient).
Qualifying clients (those with a squeaky-clean record, who pay via debit order) who now cannot pay premiums, can suspend these for a period of three months. Then, upon receipt of the first premium, their cover automatically reinstates.
In the first month following an unpaid premium, a client continues to have full cover. Following this, Sanlam has stepped in and will be providing limited cover to clients, for free, for the remaining two months. The business is taking on the full cost of this in order to protect clients and provide peace of mind. Clients will receive death and disability cover at a level of 25% of the cover they had (capped at R5 million) for the remaining duration of the ‘holiday’.
This is a critical service for South Africans in the current climate. Marx says that it is vital that people are aware that they will be paid out in the event that they are directly medically impacted by COVID-19. Unfortunately, those rendered unable to work as a result of the lockdown will not be able to claim. As in accordance with the principle of
income protection, only those impacted by illness and injury can receive a payout.
Marx says Sanlam has needed to change its claims guidelines to accommodate the realities of the current situation. The National Institute for Communicable Diseases’ (NICD) best practices apply: If an individual has been in contact/probable contact with an infected person, that individual will need to self-isolate, as in accordance with medical advice. Thus, that person is eligible to claim for income protection. If an individual does test positive for COVID-19, they can, of course, claim as well. Sanlam has introduced specific claim forms pertaining to this. It has needed to change its claims guidelines in accordance with the fact that not all claimants who are required to medically isolate will first undergo a test.
Marx concludes that Sanlam has introduced these measures in order to help South Africans to bolster financial resilience. “For 101 years, we have been a proudly South African business absolutely interwoven in the communities we operate. We are committed to helping our clients through real, responsible solutions that we hope will have an immediate impact on their lives. Additionally, we will continue to work alongside our intermediary partners to support them in providing much-needed advice to help clients to reprioritise their finances.”
In addition to these measures, Sanlam is one of several companies to join with the Motsepe Foundation in pledging a collective R1 billion to assist with the pandemic and its related challenges in South Africa and across the continent.