Ten vital life insurance insights for the new normal

The COVID-19 pandemic has upended life as we knew it, says Discovery Life Deputy CEO Gareth Friedlander.

Gareth Friedlander, Deputy CEO, Discovery Life

“As our knowledge of the disease caused by the Severe Acute Respiratory Coronavirus 2 (SARS-CoV-2) rapidly evolves, so too does our understanding of the unique risks it presents to your clients,” he adds.

“At Discovery Life, we work hard to ensure our clients are protected when they need us  most. As we strive to progress and honour this commitment, we have enhanced our life insurance benefits to meet the unique risks presented by the COVID-19 pandemic.”

These are the ten things that your clients should know about the importance of life insurance at a time like this.

1. Life insurance is a key component of sound financial planning  

Appropriate life insurance is crucial to protecting the long-term financial health of your clients. A Discovery Life Plan offers comprehensive and robust cover that has been adapted with the current environment in mind and which can be tailored to meet the specific needs of your client –  whether during a pandemic or not.

In the event of death, your client’s family or loved ones will be paid out a lump sum depending on the insured amount, which can be used to cover any financial requirement. In addition, severe illness, disability, and income protection benefits can cover your client’s financial needs in the form of either a lump sum pay-out or a regular income while the financial costs of their children’s education can be provided for.

2. Life insurance offers clients certainty, in uncertain times

As people are confronted with the uncertainty of possible illness or other life-changing events during a period of great change, life insurance offers security. Most people who contract SARS-CoV-2 will show only mild symptoms of the COVID-19 disease but in very severe cases, with secondary complications, your clients may require hospitalisation and potential mechanical ventilation.

Appropriate life insurance cover, such as through Discovery Life’s Multi-organ Benefit which is embedded in the existing Severe Illness Benefit, provides the certainty that the financial needs of your client will be taken care of if their health is severely compromised.

3. Traditional’ life Insurance policies with critical illness cover may not be appropriate for the current pandemic

Traditional life insurance products tend to evaluate illness using a ‘siloed’ methodology, which considers the damage caused to single body organs, such as organ failure as a result of chronic conditions. However, we now know that COVID-19 is a systemic, multi-organ, disease which can lead to failure of two or more body systems.

 The traditional siloed methodology is not an appropriate approach in light of the unique risks presented by COVID-19. It may mean that your clients will not receive a pay-out, even if they become severely ill. Discovery Life’s market-first Multi-organ Benefit, which is  embedded in the Severe Illness Benefit, was introduced to cover this gap.

4. All existing cover remains relevant for clients in the event of death

Owing in part to advances made on how best to treat COVID-19, the mortality rate among South Africans remains lower than in other parts of the world. Although COVID-19 is a new illness, all pre-existing cover and benefits of your client’s life insurance plan remain in place and your client would be fully covered in the event of death due to Covid-19. 

5. Life insurance protects your client’s income

Should your client contract the virus, or become severely ill from the disease, this could result in them having to take time off work. Discovery Life’s market-leading Income Continuation Benefit provides a regular income in such an event. The benefit would begin paying out after the selected waiting period and the monthly pay-out would be dependent on the percentage of your client’s salary which they had decided to insure, as well as the severity of the illness and the impact on your client’s ability to work.

6. Cover in the event of disability

Although we are in the early days of assessing the long-term health risks posed by COVID-19, it is unlikely that the disease will result in permanent disability arising from secondary complications. However, in the unlikely event of permanent disability which falls under the one of the criteria of the Capital Disability Benefit, your client would be able to claim along the normal assessment criteria.

7. The importance of remaining covered

The uncertainty created by a crisis such as the COVID-19 pandemic may motivate your clients to cut-back on their insurance to save costs. This can be a critical mistake. While we understand that these may be trying times, life insurance is there to get your clients through the challenges that lie ahead. Cutting costs today could dramatically compound the financial difficulties your clients could face in the future.

8. The importance of proper disclosure

While it may be tempting to get cheaper long-term insurance cover by omitting vital information during the application process, this can be a devastating mistake with dire consequences. Upwards of 99% of all claims against fully underwritten life insurance policies are paid by South African life insurers. However, half of all claims that are declined have historically been due to non-disclosure where the policyholder did not disclose material information about a medical or lifestyle condition. Full disclosure is critical to ensure that your claims will be paid when the time comes.

9. It’s never too late to take out cover

Life insurance is always a critical financial services product and the COVID-19 pandemic has served as a reminder of this. Your clients individual circumstances are changing constantly, especially during uncertain times likes these. At the same time, the products available in the market are constantly being improved through new innovations. It is therefore vitally important to regularly touch base with your clients to ensure their current needs are being fully met and that they have access to the latest benefits and technology available to protect them and their families during these unprecedented times.

10. Discovery Life supports clients to maintain good health

One of the greatest advantages to having a life insurance policy with Discovery is access to a benefit structure that rewards your client for managing their health and finances throughout the policy term. Such rewards include premium discounts and PayBacks, which resulted in Discovery Life clients receiving R1.6 billion and R1.2 billion in value, respectively, during 2019.

Furthermore, insights from Discovery’s data has revealed that those who are actively involved in its Vitality programme display a substantially lower likelihood of becoming severely ill. On average, engaged Vitality members have a 37% lower COVID-19 mortality risk. This, on average, entirely offsets the increased COVID-19 mortality risk due to age of a 65-year-old client when compared to a 45-year-old client.

Discovery Life Limited. Registration number 1966/003901/06, is a licensed insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555. This article does not constitute financial advice.

Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za