Mod 3 Part 2 Life Plan Range as at Oct2014

PRESENTATION TITLEPRESENTATION TITLE

GOAL CATEGORIES & THE RMM SOLUTION

1

Category Description RMM solutionInvest Saving for a future goal 2-IN-ONE Savings 4 my Goal

Retire Saving to be able to maintain a lifestyle after retirement

Retirement Plan

Death & Disability Leaving sufficient funds behind to settle outstanding debt and take

care of dependants

• Pure Life Plan• Life & Disability Plan• Accidental Death &

Disability PlanPaying for a dignified funeral • Funeral Care Plan

• Standard Funeral Plan• Comprehensive + Funeral Plan

Education Saving for a child's education to ensure a brighter future

2-IN-ONE Savings 4 Education

Debt Free Settling all debt or consolidating debt to ensure greater disposable income

Old Mutual Finance

Household & Car Ensuring your personal belongings against theft or damage

iWYZE


FINANCIAL GOAL: LEAVING SUFFICIENT FUNDS BEHIND TO SETTLE OUTSTANDING DEBT AND TAKE CARE OF DEPENDENTS

2

Why would your customers need life & disability cover?

• Settling outstanding debt in the event of death or disability.

• Taking care of dependents financially in the event where the main breadwinner should die or become disabled.


LIFE PLAN RANGE

3

Theory table

Pure Life Plan Life & Disability Plan Accidental Death & Disability Plan

Eligibility Policyholder only Policyholder only Policyholder only

Minimum entry age 16 16 16Maximum entry age 60 60 60Minimum premium Determined by age and cover selectedMaximum premiumMinimum term N/A N/A N/AMaximum term Whole life Whole life Whole lifeMinimum cover/benefit

R50 000 R50 000 R50 000

Maximum cover/benefit

R500 000 R500 000 R250 000

Maximum cover/benefit Combined

R750 000


LIFE PLAN RANGE

4

Pure Life Plan Life & Disability Plan Accidental Death & Disability Plan

Premium increase To be determined by Old Mutual but expected to also be 5%Cover/benefit increase

5% 5% 5%

Paid-up benefitTerminal Illness BenefitIncome Assistance BenefitCessions AllowedCash Back BenefitPremium HolidayFamily Support Services

Yes No Yes No Yes No








LIFE PLAN RANGE

5

Covered events

Pure Life Plan Life & Disability Plan

Accidental Death & Disability Plan

Natural Causes

Accidental Causes

Death

Disability

Natural Causes

Accidental Causes

Death

Disability

Natural Causes

Accidental Causes

Death

Disability


LIFE PLAN RANGE: EXCLUSIONS

6

•Claims will not be paid if the benefit is not valid or if there is evidence of fraud

•There will be claims underwriting to investigate fraud and non-disclosure

Death Exclusions

•Deliberate exposure to exceptional danger, attempted suicide, self inflicted injury or the insured’s own criminal act.

•War, terrorist activities, riots, civil commotion, rebellion or insurrection.

•Injury or sickness in respect of which the insured received treatment of any kind during the three year period immediately prior to the date he/she became covered for disability benefits

Disability Exclusions


LIFE PLAN RANGE: FEATURES EXPLAINEDWhat is the Terminal Illness Benefit? (N/A for ADDP)

50% of the benefit will be available after the policy has been in force for at least 5 years if:

Old Mutual’s Chief Medical officer confirms that a covered life is expected to die within 12 months.The benefit is in a active status.No previous terminal illness payments was made from the policy.The claim of this benefit is prior to the death of the life assured.

Please take note: The remaining 50% of the cover will remain active for as long as the customer continues to pay premiums and it will pay out on the death of the covered life.

7


LIFE PLAN RANGE: FEATURES EXPLAINEDWhat is a staggered waiting period? (N/A for ADDP)

Earlier in this module you learned what a waiting period is and why it is necessary. Let’s take a look at how waiting periods work when dealing with the Pure Life Plan and the Life & Disability Plan.

On death/disability due to natural causes:

8

Money Back Guarantee

50% of Cover

100% of Cover6 months

12 months


On death due to suicide

LIFE PLAN RANGE: FEATURES EXPLAINED

9

24 months


100% of Cover

On disability due to attempted suicide




10

100% of Cover

On death/disability due to accident


LIFE PLAN RANGE: FEATURES EXPLAINEDThe Income Assistance Benefit? (N/A for ADDP)

11

Waiting period

Death due to natural causes Death due to an accident

Income assistance

portion

Remainder of the benefit

Income assistance

portion


Less than 6 months No Income

Assistance Benefit


10% of Cover up to a maximum of

R50 00090% of cover

More than 6 months but less than 12 months


R50 00040% of cover


R50 00090% of cover

Equal to or more than 12 months


R50 00090% of cover


R50 00090% of cover



12

Income Assistance activity.

Waiting period

Death due to natural causes Death due to an accident

Income assistance

portion


Income assistance

portion


Less than 6 months No Income

Assistance Benefit


R10 000 R90 000

More than 6 months but less than 12 months

R10 000 R40 000 R10 000 R90 000

Equal to or more than 12 months

R10 000 R90 000 R10 000 R90 000


LIFE PLAN RANGE: FEATURES EXPLAINEDWhat is a cession? (N/A for ADDP)

In an earlier module you learned that when a customer cedes a policy to a financial institution as security he/she becomes the cedent and the financial institution becomes the cessionary.

Below is an illustration of how a cession works.

13

Customer Financial

institutionLife and/or disability cover

R500 000Life and/or disability cover

Bond or loanR500 000

When a Pure Life Plan or a Life & Disability Plan is ceded to a financial institution, the waiting period will be waived if:

•The financial institution is willing to accept it as security.•It is taken out with a new home loan.

•The cession is done within 6 months of taking the new home loan.


LIFE PLAN RANGE: FEATURES EXPLAINEDWhen will the benefit cease?

The Pure Life Plan, Life & Disability Plan and Accidental Death & Disability Plan will cease under the following conditions:

Death of the policyholderDisability of policyholder, if policyholder claims or stop paying premiums because of the disability.If premiums cease, the Premium Holiday Benefit is exhausted and the grace period used.If stop order has not started operating 6 months after applicationIf debit order has not started operating 2 months after signing.

14



15

How does the annual premium and cover increases work?

Cover increases annually on 1 July by 5% provided the policy has been in force for more than 6 months.

The premium increase can vary annually but it is expected to be the same as the cover increase. A customer has the option to not pay the increased premium. This would lead to a situation where Old Mutual must amend the cover .

Following below is an example of how the cover will be amended if a customer chooses not to pay the increased premium.

A customer purchases a Life &Disability Plan for a R100 000. At July the cover will increase by 5% and the premium by 3%. The customer does not want to pay the increased premium.

The cover will be amended as follows:

New cover = R100 000 × (1+5%) ÷ (1+3%) =R100 000 × 1.05 ÷ 1.03 =R101 942


LIFE PLAN RANGE: FEATURES EXPLAINEDWho can be the premium payer for the Life Plan Range?

Premiums are payable by stop order from the customer’s pay slip or by debit order from the bank account of:

The customerThe customer’s spouseThe employer of the customer

What is the Cash Back Benefit? (N/A for Pure Life Plan and Life & Disability Plan)

After every 60 premiums received by Old Mutual, a customer will get a cash back amount equal to 5 current premiums.

16


LIFE PLAN RANGE: UNDERWRITING PROCESS

17

Call CentreThe Call centre will call the

customer and ask the relevant medical questions. The Call Centre

could reject application for the following reasons:

1. Customer could not ne reached after 9 attempts.

2. Customer’s contact details is incorrect.

3. A loading is applied to a stop order application

Underwriting DepartmentThe Underwriting Department can

do one of three things with the application:

1. Accept2. Decline

3. Load

Call CentreThe Call Centre will contact the

customer again and give him/her 2 loading options:

1. Lower cover for the same premium

2. The same cover for a higher premium (Premium loading)

The AdviserYou have to contact the customer

again to arrange a follow up meeting during which a new

premium must be calculated should the customer choose to keep the

same cover amount.


LIFE PLAN RANGE: UNDERWRITING PROCESSWhy do we make use of a call centre in underwriting process?

Benefits for you

Time constraints at point of sale is reduced.

Removes the responsibility from you to ask sensitive medical questions.

Underwriting questions are recorded, this can be used as proof at claim stage.

Benefits for the customer

It is easier for customers to answer sensitive questions coming from someone that they do not know and probably will never meet.

Customers can choose when they want to be called and this creates a convenient time for them. 18


LIFE PLAN RANGE: UNDERWRITING PROCESS FOR HIV+ LIVES Background

The industry has traditionally shied away from covering the HIV positive customers on an emotional level.

South Africa’s focus on making anti-retroviral medication available to all and the fact that the industry now has sufficient statistics to price realistically led to a scenario where we can offer benefits to HIV + customers.

It is regarded to be a controllable chronic disease like diabetes and rated accordingly.

At a previous ASISA conference a suggestion was made that smokers may be a worse risk than certain HIV + risk profiles.

Life expectancy of HIV+ people are now estimated to be around 80-85% that of an HIV- person.19


LIFE PLAN RANGE: UNDERWRITING PROCESS FOR HIV+ LIVES The following HIV+ customers will be accepted:

Well controlled customers with acceptable CD4 counts and who have been on anti-retroviral treatment for 12 months or more.

Healthy customers not yet on anti-retroviral treatment but with good CD4 counts.

There is a further requirement for those not on anti-retroviral treatment however:

They need to commence with treatment when recommended and they must continue with treatment for at least 12 months.

20


LIFE PLAN RANGE: CALCULATIONS

21

How do you calculate cover?

Premium

- R15

× R1000

÷ Rate

= Cover

How do you calculate premium?

Cover

× Rate

÷ R1000

+ R15

= Premium

Important note: The R15 is known as the base rate and must always be subtracted from the premium when a customer tells you what premium he/she wants to pay . The R15 base rate must always be added to the premium when

a customer tells you how much cover he/she wants.



22

How do you calculate cover?

Premium R255

- R15 R240

× R1000 R240 000

÷ Rate 1.20

= Cover R200 000

Practical example for cover calculations

Premium: R 255Rate: 1.20



23

How do you calculate premium?

Cover R300 000

× Rate 1.50

÷ R1000 R450 000

+ R15 R450

= Premium R465

Practical example for premium calculations

Cover: R300 000Rate: 1.50


24

COVER RATE PREMIUMR280 000 1.20 R351R412 000 1.40 R591.80PREMIUM RATE COVER

R400 1.70 R226 470.59R111 1.60 R60 000

COVER RATE PREMIUMR240 000 1.20 R303R130 000 1.50 R210PREMIUM RATE COVER

R200 1.70 R108 823.53R400 2.20 R175 000


R140 0.80 R156 250R85 0.90 R77 777.78


R145 3.10 R41 935.48R170 1.90 R81 578.95

Cover & premium calculations.


IMPORTANT STEPS TO FOLLOW WHEN CALCULATING COVER AND PREMIUM FOR THE LIFE PLAN RANGE

25

STEP 1Make sure that you are using the correct plan’s rates. (It is a very common error to use the Life and disability plan’s rates when a client is actually interested in Pure life plan or visa

versa.)

STEP 2Make sure that you are using the correct age band. (Another common error is to use the

age band above or below the one that you are supposed to use.)

STEP 3Remember to include the base rate in your calculation when dealing with Pure Life and Life

and Disability Plan.

STEP 4Do all your calculations more than once. (Your calculator can not make a mistake but you

can still input the incorrect information.)


Income Assistance Portion Remainder of the benefitR22 500 (10% of R225 000) R90 000 (40% of R225 000)

QUESTION 1

26

Cover & premium calculations.

Samuel is 38 years oldRate = 1.70R225 000 × 1.70 ÷ 1000 + R15 = R397.50

Income Assistance Portion Remainder of the benefitR22 500 (10% of R225 000) R202 500 (90% of R225 000)

Income Assistance Portion Remainder of the benefitR0 Money Back Guarantee


QUESTION 2

27

Maria is 30 years oldRate = 1.70(R300-R15) × 1000 ÷ 1.70 = R167 647.06

Income Assistance Portion Remainder of the benefit

R0 Money Back Guarantee


R16 764.71 (10% of R167 647.06) R150 882.35 (90% of R167 647.06)


R0 R167 647.06


QUESTION 3

28

Petso is 43 years oldRate = 0.90R100 000 × 0.90 ÷ R1000 = R90


R0 Money Back Guarantee


R0 R100 000


R0 R100 000

Mod 3 Part 2 Life Plan Range as at Oct2014

Documents

Transcript of Mod 3 Part 2 Life Plan Range as at Oct2014