I don’t think it’s an exaggeration to say that lockdown has impacted almost every aspect of our lives. From changes in the way we work to how we play, the world is a very different place to what it was just a few months ago. Lockdown has had a severe impact on the income of millions of South Africans, and people are anxiously scrambling to save money where they can.
Lockdown has also made us aware of how fragile life is, and how quickly things can change. Over the past month, our company has suddenly had a surge in interest from our clients who want to clarify the specifics of their life insurance policies or make changes to their cover. Clients are also concerned about the impact of the economic downturn on their finances, and affordability of their monthly premiums. In addition, we’ve had numerous queries from people who want to get life insurance cover, so they can ensure that they have financial protection should something happen to them.
If you’ve got life cover, or you’re thinking about getting life cover, here’s what you need to know about life insurance in lockdown:
1. Claiming and getting cover – Life insurance is regarded as an essential service, so you are still able to claim, or purchase cover, during this period. Many life insurers are making arrangements to work with financial advisers to ensure you can access financial protection during this time. For example, with BrightRock, qualifying clients can get cover now but send us their insurance blood test results after lockdown has ended.
2. Loss of income – We’ve had many people calling in to ask if they can claim from their life insurance if they lose their income as a result of the lockdown. Life insurance covers illness, injury or death – and some life insurance products may cover you for retrenchment. However, most life insurance products don’t cover you for loss of income due to economic factors.
Most life insurers have issued information confirming how they’ll cover you if you are diagnosed with COVID-19 – typically, this would be covered by your temporary disability cover if you are unable to work, once you’re waiting period is over, due to the illness. Death claims will be covered. Depending on the claims criteria, your life insurance may also cover permanent disability or critical illness claims if you suffer from serious complications related to COVID-19.
3. Lapsing of cover – If you’re having financial problems at this time, it’s a good idea to contact your financial adviser, who can help you find ways to reduce your premium without losing your cover. Lapsing your cover will leave you without financial protection when you need it most. And you may struggle to get cover again later as you’ll have to reapply from scratch, which means you’ll go through full underwriting again and – if your health has changed – you may end up paying more or even find that you’re uninsurable.
4. Premium freezes – Some insurers are offering a premium freeze. It’s important to note that premium freezes for life insurance don’t work the same way as a premium holiday on your bond repayment. With life cover, you can’t simply resume your repayments after the premium holiday has ended. If you don’t pay your life insurance premium, you don’t have cover – so if something happens to you during the premium holiday, your claim won’t be paid, or just a portion of your claim will be paid. This could have serious financial consequences if you suffer a serious illness or injury during the premium freeze period.
5. Reviewing your cover – It’s always a good idea to review your cover regularly to make sure your policy meets your current needs. We recommend that you get advice from a financial adviser, who can help you shop around to make sure you’re getting the best value for money.