It was the best of times…and it was the worst of times.
Charles Dickens came up with that line in A Tale of Two Cities so we stole it.
In our story it’s more like a tale of two guys…
- Both are in their twenties.
- Both are in tip top physical condition.
- Both are applying for life insurance.
- Guy number one – let’s call him Bob – sees his dad’s broker while
- Guy number two – Joe – starts making a few phone calls.
Here’s Bob’s story:
Bob sets up an appointment to meet after work. The financial advisor starts off by collecting Bob’s financial information. Together they identify the various risks facing Bob. At this point it’s getting late and so they set an appointment for the next week.
Bob and his advisor meet again, and the advisor recommends that Bob take out a product which addresses life, disability, and critical illness. The price is a bit higher than what Bob wanted to spend, and so they agreed to address certain of the risks at a later stage.
Bob signs the application form, and now they wait
Since Bob is in excellent health, all the insurance company requires, is a blood test. A nurse calls him and sets an appointment for the tests.
By the end of the week Bob gets a call from his advisor who says the cover has been granted, and that Bob is now the proud owner of one million Rand in life insurance.
Bob’s approach is great, nothing wrong with it at all. In fact, for those of us who have more miles under the belt, this is a fantastic approach. By miles I mean the person with a few health niggles here and there. Anyway, on to Joe now…
Joe calls a direct life insurance company for a quote. They run through a financial plan which consists of a basic estate duty calculation. Their website then tells him:
- How much cover he qualifies for, and+
- How much cover he needs to address his shortfalls when it comes to death, disability, and dread disease.
Joe is only interested in taking out life cover, and let’s face it; most of us have only one or two really big concerns.
A family member has just been diagnosed with cancer; we’re scared that the same thing might happen to us, and so we get a quote on cancer cover. Yip, it’s great knowing about occupational disability cover, but right now I want cancer cover.
The call centre agent prepares a quote for Joe based on one million Rand.
Joe’s happy with the cost and gives the go-ahead. By the end of the call Joe’s covered.
There is no week two.
Both options are great, but…
- Neither Bob nor Joe has hidden any information from the life insurer so there won’t be issues at claim stage. As mentioned before, as we pick up mileage we start getting the occasional health issue, and it starts getting complicated. In situations like this it’s best to go the full medical route.
- Both are paying roughly the same for their life insurance. Problem Bob has is that he selected a 5% annual increase in the cost. Joe, on the other hand, enjoys a flat cost for the first two years of his life insurance. After these two years are finished, his cost then increases by 5% every year thereafter. In year two, Joe is still paying the same while Bob has just had his first price increase, Fortunately Bob and Joe don’t discuss their personal finances. Can you imagine how Bob would feel if he knew this?
- Bob had to go through a couple of blood tests – glucose, HIV, Cholesterol, and Liver function, nothing major, but all Joe needed to have done was an HIV test. Joe has two options – he can have a blood test done at his nearest Lancet laboratory or a cheek swab at the nearest Link pharmacy. The cheek sounds sweet, what do you think?
Joe seems to have had an easier time getting life insurance than Bob did.
So let’s talk about direct life insurance for a moment
When it comes to direct life insurance you want to be with a reputable company that’s been around a long time. They must do one thing and one thing well – getting you convenient, hassle free life insurance today which will pay – one day!
Think of Joe who’s about to fly out of the country on business tomorrow morning.
Joe calls a direct insurer and is covered immediately. Bob on the other hand, can’t get an appointment with his advisor till next week, and then it still takes a day or two to get the decision.
- Depending on which life insurance company he decides upon, Joe can take out up to R10 million with one phone call.
- We also found one where Joe will pay the same cost for the first two years and thereafter the cost increase with 5% every year.
- There are no medicals involved besides the HIV test. Be careful here though…if you don’t go for the test then the cover defaults to accidental death cover only. Not nice paying for standard life cover covering death by both natural and accidental causes, and only enjoying accidental causes.
- On his anniversary date, Joe can increase his cover without any medicals. The same thing applies if he gets married, has a child, or buys a home.
- There’s also no waiting period before being allowed to claim. The only waiting period applicable is the one for suicide, and that’s for 24 months from start date.
- Then there’s the terminal illness benefit which will pay the full life insurance amount if you are diagnosed with a terminal illness and are expected to pass away in less than 12 months from now.
- If Joe takes out disability cover along with his life cover – and then finds himself disabled – one direct life insurer will pay the cost of Joe’s life insurance (including the dread disease cover if he has any) for 5 years.
And the same life insurer is willing to meet Bob halfway
Remember Bob who decided to buy life insurance elsewhere?
- This insurer is willing to offer him life cover equal to the existing amount of life cover he has elsewhere, without an HIV test or medicals. In fact, they’re willing to offer up to R3 million cover, as long as you have R3 million existing life insurance elsewhere.
- We almost forgot the funeral benefit. Basically this is an advance of R50, 000 of your life cover and pays out within 24 hours of them receiving all the documents.
When would they ever reject your claim?
- The number one reason is because you’re not telling them the whole truth. This holds true with all life insurance companies. But it’s especially important with direct life insurance companies. Remember they offered life insurance with no medical investigations whatsoever. Expect them to do so once there’s a claim.
Suicide within the first 24 months
- Death by suicide is excluded by all life insurance companies in the first two years of the policy being active.
Taking part in criminal activities or deriving income from crime
- Anything relating to crime will not be paid
Dying from excessive consumption of alcohol or drugs
- Can you see that drinking and driving is a no-no.
Who is best suited to the company we have in mind?
Three types of people jump to mind:
- Anyone between the ages of 18 and 64.
- You obviously need to have a good track record when it comes to health, and
- You want to apply for life insurance with the least amount of hassle.
Until next time.
The InsuranceFundi Team