Life Insurance

Introduction to life insurance Do you need life cover? Do you need advice? How to find correctly defined life insurance benefits! WARNING! Overview of products available

Introduction to life insurance

Plandirect offers you access to a range of new generation risk products from all the leading providers in South Africa, which enables you to obtain transparent, quality, low cost risk cover. The products offer the required flexibility to accurately address your unique needs and requirements for life cover and benefits.

Do you need life cover?

Use the life cover needs calculator to determine if you need life cover, and if so, how much life cover will address your unique needs. You only need cover equal to what you actually need.

Do you need advice?

All though benefits could have the same name at different providers, this does not mean it has the same definitions for benefits and claim events. The fact is that there is not one benefit at different providers that has the same definitions when it comes to definitions and T&C’s of benefits. An experienced advisor can help you to find the product that was developed for your circumstances at the company that addresses your needs the best at the right price. When you buy life cover as sometimes advertised with gimmicks, for the price or cash back being the main attraction, chances are good that your benefits are not as you perceive it to be. We would highly recommend you get advice from an experienced financial advisor to help you find the ‘correctly defined’ cover at the best price. If the price is the cheapest or you get loyalty bonuses, it should be a bonus but the main consideration should be on the quality of the benefits you buy! Contact an financial advisor representing big brand product providers and have peace of mind that you have found a solution aligned to your unique needs containing definitions that sets benchmarks.

How to find correctly defined life insurance benefits!

After calculating your need for life insurance, you can contact a financial advisor in your town or request a quote direct online and one of our experienced financial advisors will assist you to find a quality solution considering your unique wishes and profile (age, work, budget, smoking status, benefits needed, etc.). The financial advisor will not only find you an affordable solution but most importantly, a solution that addresses your needs appropriately with correct defined benefits by comparing products only from leading major product providers in South Africa.

WARNING!

When you are searching for a finacial services solution the focus should be on how much of the correctly defined benefits you need and not on the price of the solution or on one or other gimmick such as cash back! If the solution you find is cheap and it offers loyalty bonuses or cash back at a spesific stage in the lifetime of the solution, it should be a bonus! Many of the direct marketers of financial services put a lot of time and money into advertising gimmicks to attract new business and never advertises the truely important factors of any benefits such as the definitions, T&C's or exclusions! The only way to find true peace of mind is to find quality big brand product solutions aligned to your unique needs and circumstances. Use a qualified and experienced financial advisor in your town or request a quote direct from an experienced financial planner!

Overview of products available

According to the client’s cover needs the following products are available where he or she qualifies for it: WHOLE LIFE The whole life products offer cover for every chosen benefit up to that benefit’s maximum benefit age. For benefits such as death and whole life dread disease, cover is provided until the death of the life insured. The maximum benefit ages of the other risk benefits are set out later under the spesific benefit description. Payment patterns The following payment patterns are available: LEVEL: GROWTH OPTIONAL The planholder can choose to make a level payment for a level amount of cover over the term of the risk benefit. With a level payment pattern, the insurance company effectively takes the mortality or morbidity curve over the future lifetime of the insured, and flatten it out. The planholder therefore makes a payment that is initially more than the true underlying risk, but less later on. The advantage of the level payment pattern is that it provides stability to the planholder. Apart from possible adjustments at the end of a guarantee period, payments will remain the same over the long term. Normally different payment and cover growth options may be added to a plan. FIXED COMPULSORY GROWTH Under this pattern, payments are contractually required to increase annually at a fixed rate, to maintain the chosen level amount of cover. The fixed compulsory growth payment pattern offers a cheaper initial payment than the level payment pattern, but gets more expensive over time. A higher compulsory increase percentage is required to secure cover growth. Payment increases are contractual. If the payment growth is cancelled, skipped or lowered, the cover growth will be cancelled, and in addition the cover amount of a benefit may be reduced. The underlying risk typically increases by a lower percentage than the payment at younger ages, and a higher percentage than the payment at older ages. The fixed compulsory growth pattern mimics the risk curve with a fixed increase percentage. AGE-RELATED COMPULSORY GROWTH The compulsory annual payment increases required to maintain the chosen level amount of cover are fixed upfront, for the duration of the plan. In this case, the annual payment increases follow the shape of the risk curve more closely. This requires lower compulsory increases at younger ages, and higher increases at older ages. The age-related payment pattern also offers a cheaper initial payment than the level payment pattern. This pattern also gets more expensive over time. A higher set of age-related growth percentages is required to secure cover growth. The payment growth is compulsory to maintain the contractual cover amount of a benefit and the cover growth. If the payment growth is cancelled, skipped or lowered, the cover growth will be cancelled, and in addition the cover amount of a benefit may be reduced. STEPPED: GROWTH OPTIONAL The plan normally provides cover for as long as a benefit allows, but it is initially priced for a fixed period of 10, 15, 20 or 25 years only. At the end of this term, the plan is extended for a further term, and the payment is automatically re-calculated for the next period, or until the benefit cease age is reached. No underwriting or intervention by the planholder is required at that stage, i.e. the insurability of the life insured is guaranteed for the full duration of the contract. The increase in payment is determined by the life insured’s age at the time of the increase. Different payment and cover growth options may normally be added to the plan. YEARLY RATED GROWTH The payment increase each year is based on the rates applicable for the planholder’s age at that time, i.e. the planholder’s payments will be adjusted yearly. On the yearly rated growth payment pattern, rates are not guaranteed and can change from time to time. The expected payment increases, will be indicated on the quotations, calculated based on the rate set applicable on the start date. The payment rates for this pattern will completely differ from those of the age-related compulsory growth payment pattern. The recalculation of the payment is compulsory to maintain the contractual cover amount of a benefit and the cover growth. If you request us to continue with the payment as before the increase, the cover growth will be cancelled, and in addition the cover amount of a benefit will be reduced. No guarantee term is available on a plan with a yearly rated payment pattern. Different payment and cover growth options may be added to the plan. Payment growth choices available Different growth option is available on the cover you elect to take on your plan. The growth options vary according to the product your elect to take out and can range between no growth to different percentages according to the plan en the company that provides the product. Some of the more popular growth options are: OPTIONAL GROWTH FIXED COMPULSORY GROWTH AGE-RELATED COMPULSORY GROWTH Guaranteed period A guarantee period is the period that the product provider guarantees your premium will not increase more than you were quoted for this period. After the guaranteed period has elapsed the provider could increase your premium in line with their new business principles at the time of the increase (after guaranteed period) Guarantee periods differs between the providers and are a very important factor to consider when you take out a new plan. Product providers in some cases have a cap on the amount that the premium may increase by after the guarantee period and other providers aren’t very transparent about this important factor or have no cap. After the guarantee period your insurability might not be what it was at the inception of your plan and if premiums are increased be a greater percentage than your abilities it could cause you to have no cover the day when you need it the most! Guarantee periods at our respected providers will look something like this: WHOLE LIFE PRODUCTS Except in the case of the whole-life guarantee, the guarantee period works as follows: All payment patterns except stepped: The initial payment has been calculated for the full term of the benefits and is based on The provider’s best estimate assumptions of claims and other factors. When a guarantee period ends, a new guarantee period will start. At the end of each guarantee period, The provider will review the payment. The provider may then adjust it, but normally only if The provider’s assumptions of claims and other factors have changed, and not because a life insured is older at that time. When The provider reviews their assumptions, The provider looks at the expected experience relating to claims, investment returns on payment income, the incidence of taxation, the cost of reinsurance, and lapses. The provider will analyse The provider’s actual experience as well as industry experience of these factors for similar plans, the expected impact of future medical advances and practices, and other trends and/or practices that are expected to influence these factors. The provider will then compare the assumptions applicable at the time of the payment review with those that were previously used and, by reference to that comparison, use a fair and reasonable method of calculating any adjustment to the payment. The payment may increase at each payment review as a result of the revised assumptions. An adjustment to the payment will not depend on the life insured’s individual circumstances, for example the life insured’s health, at the time of the payment review. One of the preferred providers in our offering has a maximum cap of between 20% and 30% after the initial guarantee period, others again have no cap. If the payment increases as a result of a review, the planholder can choose to continue paying the amount before the increase, instead of the increased amount. The provider will then reduce the cover amount of a benefit proportionally. After expiry of the initial guarantee period consecutive further guarantee periods will apply. Stepped payment pattern: The initial payment is calculated for the guarantee period only, and is based on The provider’s best estimate assumptions of claims and other factors. When a guarantee period ends, a new guarantee period will start. At the end of each guarantee period, The provider will review the payment. The provider will then increase the payment because a life insured will be older at that time. The provider may also adjust the payment to reflect, if applicable, changes in our assumptions of claims and other factors. When The provider reviews its assumptions, it looks at the expected experience relating to claims, investment returns on payment income, the incidence of taxation, the cost of reinsurance, and lapses.The provider will analyse its actual experience as well as industry experience of these factors for similar plans, the expected impact of future medical advances and practices, and other trends and/or practices that are expected to influence these factors. The provider will then compare the assumptions applicable at the time of the payment review with those that were previously used and, by reference to that comparison, use a fair and reasonable method of calculating any adjustment to the payment. The increase in the payment will depend on the life insured’s age at the time of the payment review, and not on the life insured’s individual circumstances, for example the life insured’s health. There will be no limit to the increase. This increase applies in addition to any contractual predetermined payment growth on the same date. The increase in the payment as a result of a review will become effective from the end of a guarantee period. The provider will notify the planholder in writing before the increase. The planholder can choose to continue paying the amount before the increase. The provider will then reduce the cover amount of a benefit proportionally. After expiry of the initial guarantee term consecutive further guarantee periods could apply. TERM COVER PRODUCTS The initial guaranteed period of a term cover plan is normally the same as the initial term. The initial payment will normally be calculated for the guarantee period, and is based on The provider’s best estimate assumptions of claims and other factors. When a guarantee period ends, the benefit ends. If the planholder requires further benefits for the insured life/lives, a new plan must be taken out, with the normal new business requirements and underwriting requirements which apply. INCOME PROTECTOR PRODUCTS The initial payment is normally calculated for the full term of the benefits and is based on The provider’s best estimate assumptions of claims and other factors. When a guarantee period ends, a new guarantee period will start. At the end of each guarantee period The provider will review the payment.The provider may then adjust it, but only if The provider’s experience has changed, and not because a life insured is older at that time. This increase is applicable in addition to any contractual predetermined payment growth on the same date. Cover and end date The cover end date for every chosen benefit is set out in the contract document. In the case of a whole life product this is the plan anniversary before or on the maximum benefit age of the benefit. For a term cover product it is indicated as the earliest of the plan anniversary before or on the maximum benefit age of the benefit, and the end of the chosen term. In the case of an income protector product it is the plan anniversary before the chosen cessation age of the benefit. Cover for a benefit normally ends at midnight before the cover end date as indicated. The plan will end if all benefits have reached their cover end dates. Lives insured WHOLE LIFE AND TERM COVER PRODUCTS More than one life insured may normally be insured per plan. Different benefits may be selected for each of the lives insured. The planholder must have an insurable interest in each life insured. Normally minimum age at entry: 15 next birthday (for combination product included) INCOME PROTECTOR PRODUCT Only one life insured per plan is permitted. Accelerator benefits vs. stand-alone benefits Risk cover benefits with the whole life and term cover products are available in 2 forms, namely accelerator benefits and stand-alone benefits. With accelerator benefits an early payment of the benefit at death for the life insured concerned takes place in the event of a claim. Therefore, if The provider admits a claim for an accelerator benefit, the death benefit cover amount for the life insured will reduce by the accelerator benefit amount paid. Where the cover amount of another accelerator benefit for the life insured exceeds the reduced death benefit cover amount for the life insured, the cover amount of the accelerator benefit reduces to the same level as the death benefit cover amount. A claim on a stand- alone benefit has no effect on any other benefit. Various benefits are available as either accelerator or stand alone benefits. Others are available in stand-alone form only, while waiver of payment benefits are available as an additional benefit on whole life and term cover plans.
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Life Insurance description, calculators & quotes
TERM COVER PRODUCTS The term cover products offer cover for each chosen benefit, for the chosen initial guarantee term. The planholder selects the initial guarantee period when the plan is taken out. At the end of the chosen guarantee term, the plan ends. If the planholder requires further benefits for the insured life/lives, a new plan must be taken out. The normal new business requirements and underwriting requirements apply.
INCOME PROTECTOR PRODUCTS The income protector products offer a variety of different disability income benefits. Cover is provided, for every chosen income benefit, up to the cover end date for that chosen benefit.
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