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Life Assurance
Wednesday, April 22, 2015 - 02:16
Lifestyle rewards

Over the last 13 years more than R130 billion was paid to clients as a result of life-changing events like death, disability and critical illness. This amount was calculated by considering the claims statistics for individual life policies of the largest life insurers in South Africa. It is important to recognise that the overwhelming majority of this cover was put in place by financial advisers as part of a comprehensive financial plan.

Momentum Retail Insurance released its claim statistics for the period January to December 2014 during which time over R1,9 billion was paid in death claims and more than R2,7 billion paid across all benefit types, including death benefits. More so, they paid R34 billion in risk claims over the past 12 years.
It therefore comes as no surprise that some of their largest claims during 2014 included:

  • A death claim of R22 million
  • A terminal illness claim of R7 million
  • A critical illness claim of R4,7 million
  • A disability claim of R10 million
  • An income disability claim of R315 000 per month

Stephen van Niekerk, Head of Momentum Myriad states that, “According to the 2014 claim statistics, critical illness was again the second largest claim category, after death claims, and increased in relative terms from 2013. With the expected improvements in longevity and the associated higher prevalence of critical illness events in older ages, we expect this trend to continue. This persisting trend once again highlights the importance of critical illness cover and longevity protection as part of your financial planning solution.
“We believe it is crucial that critical illness benefit design should ensure breadth of cover and claim definitions should not be limited to cover against the ‘Big four’ (heart attack, heart bypass, cancer and stroke). Our claim statistics for 2014 once again highlighted the importance of this. Even though the Big Four conditions accounted for 71% of all the critical illness claims, it also means that the remaining 29% of claim events were as a result of conditions that fall outside of these.”
Given the recent tax changes on income disability benefits it is worthwhile mentioning the importance of being protected against the financial impact of temporary disability. Lump sum benefits do not provide any protection against shorter-term temporary disabilities. In 2014 more than a quarter of our income disability claims were as a result of short-term disabilities such as hospitalisation or recovery from early stage cancer treatment; something these clients would not have benefited from under lump sum solutions.
This is why Myriad, as Momentum’s flagship life insurance product, has provided cover to more than 500 000 lives since its inception in 2002. It also explains why the total sum assured on the Myriad book for the period under review exceeds R930 billion. Besides paying claims, Myriad gives back to clients in other ways. Over the past 12 years, Myriad awarded R1 billion in Momentum Interactive discounts. This incentive rewards clients with discounts of up to 60% on their insurance premiums for living balanced lifestyles based on factors such as body mass index, cholesterol, blood pressure or for engaging with Multiply, Momentum’s rewards programme.
With Multiply, these guaranteed discounts starts at 10% with an entry level at Bronze status and increases to 50% if clients are on Private Club status. In addition, clients can also qualify for a 10 per cent fitness discount.
Momentum has already allocated R450 million towards clients’ Retirement Booster values. The allocations are made to clients who have both a qualifying Momentum Retirement Annuity and a Myriad life insurance policy in place. Furthermore, Momentum continuously finds innovative ways to allow existing clients to benefit from future product enhancements. As a result, the cost of these enhancements that have been introduced to existing clients, to date, have cost Momentum R200 million. This amounts to R1,65 billion that was given back to Momentum Myriad policyholders, over and above claims that were paid.
Momentum believes in treating its clients fairly and in a transparent manner. As a result, during the year under review, Momentum Myriad repudiated only 1 per cent of all claims. Repudiation refers to a breach of contract by the one party that justifies cancellation by the innocent party. It is conduct that exhibits the clear and unequivocal intention of the party concerned to no longer be bound to the contract as a result of very specific reasons.

Copyright © Insurance Times and Investments® Vol:28.4 1st April, 2015
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