DIY Life Cover: ‘we repair what your husband has tried to fix’

Life Insurance policy, life cover

There is a plumber in Cape Town who drums up business with the words ‘we repair what your husband has tried to fix’ as the tag line on his vehicles. I am sure he does quite well! It reminds me of the sign in the barber’s window that I remember from my childhood. It said: ‘Boy’s Hair-cut: R10. To fix what your dad started: R12’.

Whereas needing a little help from a (paid) friend from time to time is not the sole prerogative of the male species (no matter what your wife tells you), these examples point to a curious part of the human condition: falling for the seduction of saving a buck!

In other news, consider Google

It is difficult not to be reminded of your mortality if your internet scrolling is regularly interrupted by advertisements for life cover. Mistakenly clicking on one of these links, seals your fate; they will pop up everywhere! Even when you sit down to live vicariously through the scripted lives of others on TV, you are reminded of the fragility of your existence, mid-way through your favourite soapie.

Recall, if you will, the professional continuity presenters, dressed in formal attire, talking in respectfully muted tones, with empathy seeping from every pore. Life stories and testimonials pan to images of a dignified funeral … one cannot but marvel at how THOROUGH their support is! They make it clear that they understand the need for the immediate: they may offer airtime and groceries. They point out that they are concerned about making sure that life continues afterwards. Consider the children, they say. These plans can help you to secure their education.

There are also dread disease and disability cover advertisements. Here, thankful couples, talking in solemn voices, tell you about how fortunate they are to have been able to Pick Themselves Up and Carry On with Dignity, thanks to Clientele.

Most striking is that there is always hope.

These insurance companies are quick to tell you about the many ways in which the process has been made easier for you! You will face no more problems with finding parking before a meeting with Someone In A Suit. There are no more long and complicated forms, filled with legalese in such small print it makes your eyes water! You can compare quotes with a click. You can tell your story to a consultant, answer a few questions and the telephone recording stands as evidence, replacing a written contract. In fact, you don’t even have to call them. You only have to send an SMS and they will call you back!

However…

Even though you are the expert on your life, you may not be the expert on the technical aspects of securing your life style, or that of your children, once calamity strikes. The sad reality is that the problems with Life or Dread Disease and Disability Cover only come to light when you are in a crisis – when you and your loved ones may physically and emotionally be unable to do anything about it.

At NFS we have identified these common challenges:

  • Did you buy the correct kind of cover?
  • Did you secure the right amount of cover?
  • Has the plan been set up correctly?

Recently a woman, who was well into her 80’s, was diagnosed with lung cancer. She made the wise decision to contact NFS for help. We examined her portfolio and negotiated for her death claim to be paid out whilst she was still alive.

This action allowed her to make arrangements for the welfare of her disabled daughter and settle all family debts. The insurer did not make the offer which they should have made, and the call centre staff were not aware of her situation.

And then there is Mary

Recently, I met with Mary, a single mom with a five-year-old son. She had sent an SMS in response to a television advertisement for insurance. Within a day she had bought cover of R1 000 000. She felt proud of the fact that she had taken such a bold step to secure her child’s future. These were the questions I asked her:

  1. How much debt do you have?
    Her answer, when we included the outstanding amount on her bond, was R 1 100 000. She had no bond cover to ensure that her bond was taken care of, in the event of her passing before it could be settled. The cover should pay the bond debt, but, what was her child going to live on? He is only 5 now. Where does cash for the next 16 years come from?
  2. Does the father of your child pay maintenance?
    I learnt that her ex-husband was not paying maintenance for his son, despite a court order to do so. He had remarried in the meantime. In such cases, I prefer a Trust Fund be set up to protect the vulnerable child. Dad may be the natural guardian but seems to prefer his new family.
  3. Do you have any other insurance cover?
    She admitted that she has no pension, provident scheme or any other insurance cover. Many insurance companies have a ‘Terminal Disease Cover’ option. She did not know this. Terminal Disease Cover forces the insurer to release the value of the death claim immediately upon diagnosis of a terminal illness. This allows the policy holder to settle her matters whilst still alive.
  4. What have you put in place to secure your son’s ongoing wellbeing and education?
    We calculated her son’s living and educational needs and she realised that the current costs came to R5 000 pm. Should the unfortunate happen and she died today, she would need to have a lump sum of R2 200 000 available to provide her son with a quality education until the age of 21. Her life policy value would need at least 2,5 times the cover she put in place.
  5. Are you aware of the advantages of funeral cover?
    She did not know that she could ask for a portion of her cover to be released as ‘Funeral Cover’. Sometimes a death cover claim can take a while to settle. Having a part paid out as funeral cover, allows the family to proceed with planning and paying for the funeral.
  6. How is your Last Will and Testament structured and when last did you update this?
    As her Financial Adviser, I explained to her why it is not a good idea to set up her five- year-old as a beneficiary. Dad qualifies as the natural Guardian. He has shown a scant regard for caring for his son. He cannot be trusted to act in his son’s best interest. She should use a testamentary to protect her son.

Whilst NFS holds self-determination and self-empowerment as a core value (this is why we focus on financial literacy and advice, rather than focussing solely on selling you policies) we have seen situations, such as those described above, far too often.

Allow us to come alongside you on this journey of life. It is true that you are responsible for all your decisions and actions. However, we can make it a little easier, not by offering you loyalty points and gimmicks, but peace of mind, knowing that all aspects of your unique situation have been considered.

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