FNB product can cut premiums ‘by up to 50 percent’
First National Bank (FNB) has launched a life assurance product, restricted to its account-holders, that, FNB claims, can cut your premiums by up to 50 percent.
The policy, which is underwritten by FNB’S associated company, RMB Structured Life Limited, provides cover in the event of premature death, as well as optional cover for incapacity (you cannot perform various daily activities) and retrenchment (a lump sum equal to five percent of the life cover up to R100 000, and the premiums are paid for six months).
The death cover is for life, but the incapacity and retrenchment cover is limited to age 60. There are two premium options:
A guaranteed premium for the first five years, which may then be increased, depending on your claims history. However, FNB says the pricing has been done as if for life, so it does not expect any significant premium increases over the assured period.
A premium that escalates at five percent a year. This option allows for a lower initial premium.
The amount of your monthly premium will depend on the additional benefits you choose, your age, gender, income, education, smoker status and general state of health.
Although this is a direct-sell product, it is not a “group” product where the low-risk policyholders cross-subsidise the high-risk policyholders.
Prospective policyholders have to answer questions about their health – the answers to which will affect their premiums – and undergo an HIV test.
The incapacity benefit pays out only once and will reduce the life cover by the amount of the benefit paid. If the incapacity benefit equals the life cover, the entire policy ceases.
The incapacity assurance is not disability assurance but is based on things such as whether you can no longer do your job. It pays out if you are totally and continually unable to wash, dress or feed yourself, or perform physical activity. It also pays out if you suffer from any of 20 serious conditions, ranging from a stroke, a heart attack and cancer to loss of hearing, sight or speech.
There are a number of exemptions and qualifications for the payment of the incapacity benefit, which is based on a points-scoring system according to your inability to perform daily activities. You need a minimum of six points to qualify for a benefit.