Quicker is not always better
Establish which life policy is the right one for you
For many people, life cover is top of mind during the socalled silly season when the risk of being involved in a fatal crash is higher.
So, if you’re in the market for life cover, the new provider Simply might have caught your attention because it enables you to obtain life cover online in just 10 minutes.
But financial adviser Gregg Sneddon warns: “Do as much homework as you would if you were being advised – if not more, because you don’t have the benefit of an adviser in your corner.”
Your homework should include a due diligence on the company selling the cover, including their ability to pay claims, and make sure you understand the terms and conditions of the policy, he says.
Interrogate the life assurer’s claims.
“There’s a perception that if you ‘go direct’, you’ll get a better deal. In my experience, that hasn’t been the case, yet,” says Sneddon, who holds the Certified Financial Planner accreditation.
In a blog post, “Simply … too expensive”, Sneddon says he was excited by the launch of Simply, because cover in the direct market and for lower income earners has been “too expensive for too long”.
“Consider the example of one of my employees who has a matric and earns a gross income of about R8 000 pm. She has a fully underwritten life policy with R520 000 life cover, R250 000 critical illness [dread disease] and R280 000 impairment cover [as well as a funeral benefit].” It costs her about R220 a month.
Similar cover through Simply would cost her approximately R320 a month and provide R500 000 life cover, R300 000 disability cover and R20 000 funeral cover [they don’t offer critical illness]. “That’s substantially more expensive, with fewer benefits, than her existing policy!”
Anthony Miller, the chief executive officer at Simply, says the company’s products may not be as cheap for you as a healthy person as a policy that is fully underwritten, and where you need to answer detailed questions and undergo medical tests.
But, the premiums on Simply’s policies are not far from that of more complex policies, he says.
And Simply is typically much cheaper than other products that have no or limited underwriting, he adds.
Policies with limited or no underwriting are “one price fits all” and they are products that can be issued simply but will have terms and may exclude cover for conditions you have when you take out the cover [pre-existing conditions].
“If you compare our prices to the products offered by these players, we compare very favourably. We also have very transparent terms and conditions and no pre-existing conditions or exclusions.”
Miller says Simply has tried to get its policies as close as possible in premiums on fully underwritten policies without the complexity or inconvenience of a medical examination or blood tests. With lots of information, the best-risk person pays a low premium and the worst-risk person pays a high premium.
Miller says Simply is not the best-priced option for all people – especially “best risk” people who are happy to have medicals and answer questions.
“However, we think it’s a bit disingenuous to say that our product is expensive and not to be recommended based on a sample of one person.”