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Business Person Elect: A Truly Market Leading Income Protection Product for the Small Business Owner
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As a business with an entrepreneurial mindset, FMI are constantly redefining the income protection market, continuously evolving as an insurer and advancing product development to suit the needs of the self-employed individual. We have recently added some fantastic product enhancements to our already highly competitive Business Person Elect Policy.
Highlights of our most recent changes include:
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- Changes to the Temporary Income Protection (TIP) benefit -
- We have reduced the Primary Waiting Period from 7 days for injury and 14 days for illness to 7 days for both injury and illness claims, retrospective to day 1. For the first time this is now available to non-professionals and professionals alike.
- We have added some optional Family Benefits to the Business Person Elect TIP benefit suite. Applicants can now select a R15 000 per month Spouse Benefit or a R20 000 Child Dread Disease Benefit.
- In addition we have added a Dread Disease Enhancement benefit which enhances the TIP payout by 20% in the event of the policyholder being diagnosed with a dread disease.
- A rates reduction on Permanent Income Protection -
Permanent Income Protector (PIP) premiums have been reduced by an average of 25%. FMI have used our substantial experience as income protection specialists together with our unique claims experience and the support of our re-insurers to secure a significant rates reduction on our PIP premiums, which we have passed directly onto our valued clients.
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- Inclusion of a Freeze Benefit -
A Freeze Benefit gives the policyholder the option to stop premium payments and cover for a period of 3 or 6 months, should the business encounter difficult financial times. This benefit allows the policyholder to retain their existing policy without having to cancel and undergo underwriting again at a later stage.
- Review of Occupation Class Ratings –
FMI have reviewed all occupation classes to ensure that each rating accurately reflects an appropriate and fair risk profile.
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Business Person Elect provides cover for the business owner’s personal and business income as well as a list of business operating expenses, thereby offering a comprehensive income protection solution for the small business owner. |
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Whether you’re the owner of a small business, commission earner or salaried employee your salary ranks as among your most important assets. You need a consistent monthly income to meet your expenses and long-term retirement saving commitments. Any break in this income stream can have devastating consequences.
One of South Africa’s major life insurance companies illustrates with the following example: A professional who starts working at age 21, contributes 15% of her gross monthly salary to a company pension fund, and suffers a permanent disability event at age 30 will only have enough retirement capital to replace her salary for between one and five years. Despite the obvious risks, Absa Financial Services estimates only 6% of South Africans have insurance against loss of earnings! |
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The domestic insurance industry offers two insurance product categories to insure against loss of earnings brought on by illness, dread disease and disability events. Risk insurance pays out a lump sum on confirmation of permanent ‘full or partial’ disability, which sum can then be applied to an income replacement solution. Income protection – a slightly more expensive option – covers both temporary and permanent disruption to earnings. Financial advisers are in two minds when choosing between these products, but agree the ideal income replacement solution should include both types of cover.
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Income protection cover makes sense if you’re young – without dependants – and just embarking on your career. The cover pays you a regular monthly income in the event you suffer a temporary or permanent disability, and offers a number of benefits over the traditional risk product. First among these is the option to pre-select your retirement age, at 60, 65 or 70-years. The income protection option thus mitigates the risk of incorrectly estimating the lump sum required on a risk product. Another major plus for income protection is that it covers you for temporary disability, whereas risk products leave a large gap between the disability event and confirmation of permanent disability, often up to 12 months. A telephone technician who cannot work for three months after serious knee surgery will, for example, receive nothing on a lump sum policy because his ‘disability’ isn’t permanent.
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Salaried employees often enjoy an income protection benefit as part of their employers’ group scheme. There are some drawbacks to such arrangements. A salaried employee pooled with a large group might be overpaying for the benefits, high earners risk being severely under insured, and a successful claimant may suffer benefit cuts after one year when ‘own’ occupation definitions are replaced with ‘own or similar’ occupation wordings. Given these risks it makes sense to take out individual income protection policies. The individual policyholder can stipulate terms such as retirement age and level of cover – and the premiums are tax deductible.
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Business owners have additional income protection needs. They have to replace the income they would have drawn from their business as well as provide for ongoing business expenses. One of South Africa’s most popular income protection solutions for sole proprietors, small business owners and commission earners is the FMI Business Person Elect (BPE) scheme. BPE offers market-leading temporary and permanent income protection benefits as well as a Business Overhead Protector (BOP) benefit that pays out non-salary costs to keep the business running while the policyholder is incapacitated.
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Income protection is essential for both business owner and salaried employee – the security and peace of mind offered by genuine income replacement solutions cannot be ignored by either.
By: Gareth Stokes
(Editor for ‘Fleet Street Publications,’ ‘MoneyWeek SA’ and online Editor for FANews)
www.fanews.co.za
gareth@fanews.co.za |
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Update your quotes package now! Follow the link below:
http://www.fmi.co.za/quotes.aspx
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