Income Protection Explained

• Insurance protecting your ability to earn an income.
• Income Protection ensures you continue to receive an income, even when you are unable to work (due to an illness or disability).

• Your ability to earn an income is your greatest asset and all expenses including insurance policies, your mortgage and phone bills are dependent on this asset.
• Income Protection covers this asset and should be at the top of your “must have” insurance products list.

• Capital Disability is the term used to describe a lump sum payment that would be paid to you if you were to become permanently disabled

• Income protection looks after future living expenses should you become unable to work (due to an illness or disability) while Capital Disability covers immediate needs associated with a permanent disability such as buying a wheelchair or making your home disability friendly.
• That is why a mix of both products is ideal.
• Temporary disability, which is covered by income protection, has proven to be more common. In 2010 82% of claims lodged with FMI were temporary and lasted less than 3 months.
• Income protection can be structured to pay benefits during and after the first six months following the date of a claim, a period during which capital disability products generally will not pay out.
• Due to temporary disability claims lasting a shorter term, waiting periods are shorter and multiple claims can be made. Capital Disability products generally have longer waiting periods that could worsen any financial strain already felt.

• A waiting period is the number of days you have to wait before you receive your claim payout.
• This is a cost effective way of sieving out trivial claims to make your premium more affordable.
• If there wasn’t a waiting period we would be getting all kinds of claims for common illnesses and disabilities e.g. colds / flu etc that only last a few days.
• Due to temporary disability claims being of a temporary nature, waiting periods are shorter and multiple claims can be made.

A) Business Owners and the Self-Employed

Self-employed and financially self-reliant people carry a greater risk of not being able to sustain their personal income from their business should they be unable to work due to an accident or illness.

Every financial commitment, including medical aid premiums, retirement funding and cell phone bills would all be in jeopardy should their personal income be disrupted.

What are my options?

• TIP (Temporary Income Protection) is an ideal solution for individuals who require financial security should they be unable to perform the duties of their own occupation for less than 24 months.
• BOP (Business Overhead Protector) offers protection for important business running expenses that will still be incurred during the incapacitation of the business owner.
• Permanent Income Protector (PIP) has been designed to dovetail with TIP to provide uninterrupted income protection cover up until a selected age of retirement.

B) Your Staff

Being a business owner means you may also feel an obligation to provide cover for your employees and any risks that they may face. FMI’s Vision product enables employees to cover themselves and their families when dealing with unforeseen events that may leave them unable to work and earn an income.

C) Salaried Employees

Salaried employees also have to worry about where their next pay cheque will come from if an illness or an injury takes away their ability to work. Often sick leave is not sufficient and extended periods of time off work could leave you at risk of losing your job.

D) Younger Lives

Statistics from Arrive Alive and the Road Accident Fund (RAF) confirm that younger people are four times more likely to fall victim to an accident than older drivers, and are therefore most definitely at risk of being disabled or unable to work. These statistics point to a very real need in the market for a benefit specifically designed for younger people.

• FMI have recognised this need and developed an Accident Only Benefit offered to those aged 32 or younger.
• This benefit requires no medical underwriting and has been kept as simple as possible to make it easier for young people entering the insurance market to understand the product.
• For the first 3 years, the policy will be accident only cover at 50% of the premium. On the third policy anniversary this benefit automatically upgrades to full cover and full premium, for both accident and illness benefits.

E) You and your Family

• The Policyholder can add a Spouse Benefit to their policy, which pays a benefit for up to 2 months in the event that the Life Insured’s spouse is unable to work.
• While preparing for motherhood and taking on the responsibilities that come with having a child, the last thing a woman would want to worry about are the financial implications.
• FMI’s pregnancy and childbirth special limited benefit will pay a one month TIP and BOP benefit to all female clients following the birth of a child.
• While being part of a family and enjoying all the special moments that come with it, there are some grim realities that one may have to face, such as falling ill with a dread disease or a family member being diagnosed with a dread disease.
• The Life Insured can include a Child Dread Disease Benefit of R20 000, which is payable in the event that their child is diagnosed with a listed dread disease.
• TheDread Disease Enhancer offers cover to the Life Insured in the event of a TIP claim being related to a listed dread disease and will enhance the TIP benefit by 20%.

Underwriting refers to the process that a financial service provider uses to decide whether a client is eligible to receive their products (i.e. their level of risk is assessed).

• FMI clients are underwritten at application stage and not at claims stage. This means that at claims stage we do not usually require complicated documents to prove your income before your disability or loss of income. This greatly reduces frustration and simplifies the claims process.

• Tele-underwriting is used to gather risk and other related information over the phone.
• Medical questions traditionally asked on an application form are now asked over the phone by one of FMI’s trained underwriters who follow a pre-set script of questions.
• The gathering of information telephonically is restricted to a maximum of 20 minutes per phone call.

This is efficient and convenient for the client, and saves you time!

• Our latest Quotes Package includes a new and highly innovative Electronic Application Form, which can conveniently be completed and submitted electronically directly to FMI’s new business department, allowing for an accelerated application process.
• This e-form is simple and straightforward, not to mention extremely convenient for you
• The applications now reach FMI faster, are fully completed and therefore processed faster, ensuring a much shorter turnaround time.
• We do not require written signatures on electronic applications; as such applications are verified telephonically with the client.

When does Income Protection pay me out and when doesn’t it?

• FMI’s Claims Payment Ratio has averaged 98% for the last 3 years which is proof that we pay claims.

• Claims that are classified asNon-Taken Up (NTU) orRepudiated are not paid.
• Claims are Repudiated due to:
1. Non-disclosure of information at initial underwriting stage – honesty is the best policy!
2. Fraudulent claims
3. Pre-existing conditions (in 2010 these were mostly female life insured claimants trying to claim for pregnancy, where the date of conception was found to be prior to the date of commencement of their policy)

• Reasons for Claims being classified as NTU are as follows:
1. Policyholder no longer wishes to claim – Often policyholders realise they cannot afford to miss work for short periods of disability
2. Disability shorter than their waiting period
3. Cosmetic procedures not meeting requirements (we exclude cosmetic surgery that is purely elective – a procedure needs to be recommended by a doctor as a direct result of a medical condition or an accident)
4. Minor infections not meeting requirements (for certain minor infections like influenza or bronchitis you must be hospitalised, go for diagnostic testing or seek the opinion of a specialist in order to claim)
5. Claims as a result of drug abuse or alcoholism
6. Supporting documents not received
7. Claimant not booked off work.