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Can you still get life cover during the shutdown?

Marius Botha from Stangen Life explains how applicants can buy life and income-protection insurance during the pandemic, and the importance of prior disclosure of medical or employment conditions.

NOMPU SIZIBA: The Financial Sector Conduct Authority, also known as the FSCA, recently announced that the collection of blood samples and medical examinations as part of underwriting for life insurance does not qualify as an essential service, and must be avoided. This allows laboratories to focus on critical activities to combat the Covid-19 virus, and lowers the risk of transmission to doctors and medical staff. While a sensible course to follow, what does this mean for individuals who are looking to get insurance cover during the lockdown? Well, to give us more detail, I’m joined on the line by Marius Botha, the managing director at Stangen Life. Thanks very much, Marius, for joining us. How much of a challenge does the FSCA’s ruling on blood samples and medical examinations during the lockdown pose to the insurance industry in writing up new life insurance business?

Read: Regulator reprimands life companies still taking blood tests

MARIUS BOTHA: Most life insurance companies do have alternative products where, instead of the very large cover amounts that require more comprehensive medical underwriting, we do have products with lower cover amounts, and where we don’t have the requirement, for example, of HIV tests to be conducted. And so, as an example, from the Stangen perspective, we would grant cover up to R1.5 million on our Express Life product, and we only ask about medical-related questions – and then customers would qualify for cover.

NOMPU SIZIBA: Right. Being considered essential services, the insurance sector is currently up and running. So what life cover options are available to people seeking cover during the lockdown, apart from the Stangen one that you just mentioned?

MARIUS BOTHA: At the lower end of the market we still provide funeral cover, which customers can, for example, purchase online from insurance companies’ websites. And then we, as I’ve explained, have a semi-underwritten type products in our Express Life. We can give life cover up to R1.5 million. If you do want more life cover that does require some form of underwriting, you can still apply for cover, and we would, for example, defer the appointment date with a travelling nurse to be after the lockdown. At this stage we are hoping that it will end after the extension that was done. But, if there is a further extension of the lockdown, we will just continue deferring the appointments for the higher cover amount until such time as customers can go for them.

NOMPU SIZIBA: But what does that actually mean in practice? You go for the high cover amount, you defer the appointment in terms of bloods and so on, but if the person goes shopping to their local Woolies and then they get run over by a taxi – are they covered?

MARIUS BOTHA: In the instance of an accidental death, they would still be covered if a policy has commenced without that underwriting test being conducted. So yes, accidental death would be covered. If it’s a natural cause of death, it would depend on the circumstances. So it might be advisable to rather take full cover on the lower cover amount in this instance, and you can always upsell or buy up higher cover once we can do medical tests on you.

NOMPU SIZIBA: Are there more stringent requirements for people who are suspected to be at risk of something like HIV, for example?

MARIUS BOTHA: Yes, customers who are HIV-positive should disclose it. We always advise honest disclosure. Depending on the circumstances, and how they’ve answered all the other questions – for example, are they on antiretroviral treatment, what is their CD4 count – we may still offer them decent cover amounts. If there is other associated high risk, let’s say, hereditary disease health factors there, in some instances we would decline cover. So it all depends on the holistic risk profile of a customer.

NOMPU SIZIBA: Of course, part of the reason we’re having this conversation is because there’s this horrible virus lurking around the world. Presumably these days one of the issues insurers would want to be aware of, if someone has coronavirus, or they suspect they could have come into contact with someone who has coronavirus, are those some of the questions that are asked these days?

MARIUS BOTHA: Interestingly enough, not all the insurers have changed their processes, to ask a Covid-19 related question. The reason for that is, on the basis of available evidence it seems most people with a strong immune system would recover after acquiring the virus. And so that in itself wouldn’t necessarily present a death risk or a permanent disability risk. At most you would be in isolation or quarantine for a few days.

If you are a customer who has other associated health issues, again depending on the circumstances, we may still grant you cover, but clearly if there are respiratory-type illnesses, then we will be concerned at this stage if you have acquired the virus, or if you are likely to have been exposed. And so it is, for example, important to disclose if you’re a person under investigation at the stage when you apply for life cover.

NOMPU SIZIBA: So, in terms of your experience so far with the lockdown and so on, have you had any claims in relation to people – loss of income and all those kinds of things?

MARIUS BOTHA: We haven’t from a Stangen perspective seen any material increase in claims in our life portfolio or a funeral portfolio. I think it’s early days in terms of the number of deaths as a result of Covid-19. The last numbers I’ve seen were 27 deaths, and out of the whole population that’s a small number.

From an operational point of view, however, what we have seen is other illnesses have changed. Customers have been struggling to obtain the medical reports from either their GPs or, let’s say, hospital physicians, as a result of the preparation for Covid-19. And so we’ve responded, as a life insurance company, by just relaxing some of the claims evidence requirements that we would typically ask from the beneficiary or the claimant – just during this period, because it’s a reasonable argument from the customer perspective that they can’t necessarily found those documents.

NOMPU SIZIBA: Right. I was also referring to those options whereby you can insure your income. And then, if something happens and you’re no longer able to earn that income, you can claim from your insurance. That’s what I’m referring to. Are you having any approaches in that regard?

MARIUS BOTHA: What you’re referring to is a salary-protection or income-protection policy. Our advice to customers is that they need to make sure that they still buy that product for the right the reason – the reason being if you acquire the coronavirus and you are, let’s say, quarantined for a period, which may be two to three weeks, the product isn’t necessarily going to give you a pay-out, given that there typically is a deferred period where we would wait for employees to first utilise their sick leave. We would first establish the nature of the illness. Does it arise owing to a temporary disability from which they can recover, or ultimately permanent disability? So income protection will not necessarily be a good product from an occupational disability perspective at this stage.

If, however, if you are looking for loss of income cover as a result of the virus, and it’s not necessarily related to a disability or an infection of Covid-19, again those products typically have a requirement that you need to honestly disclose at sales stage whether you are aware of any possible retrenchments at your company, or the risk or a likelihood of being retrenched. And so, if you are a good-faith customer at this stage. where you are not aware of any possible retrenchment risk, depending on the nature of the company that you work for, we would still sell you a salary-protection policy. But if you’re a customer who is aware at claim stage, clearly that would be one of the things that we’d be looking at – again, that you honestly disclosed.

So I just advise customers to make sure to buy the salary-protection policy for the right reason over the long term, not necessarily because you are now worried about coronavirus.

NOMPU SIZIBA: Marius, many thanks for your time this evening.

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Even in an economic tsunami they are trying to sell insurance??????????

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