How life assurers have you covered for coronavirus
Firms expect a rise in claims for temporary disability on income protection policies
The country’s first two deaths from the coronavirus and rising infection rate has focused the minds of a number of South Africans on what their life policies cover — and, for those who don’t have cover or enough cover, on what could be covered by policies.
The Association of Savings & Investments SA (Asisa), which counts the major life assurers as its members, has been quick to reassure policyholders that the companies are well capitalised, with about R373bn in free assets — more than double the reserves that life companies are required to hold by law. In 2019, life assurers who are Asisa members paid out R491bn in claims and benefits, the association says.
The figures show that assurers do have a buffer to pay claims should these increase as a result of the virus, says Hennie de Villiers, deputy chair of the Asisa life and risk board committee. Life assurers being unable to meet claims is extremely unlikely given that the death rate appears to be low, he says.
Assurers are expecting that they will face more claims for temporary disability on income protection policies held by self-employed South Africans than anything else. There are fewer of these policies than lump-sum disability cover that only pays out if you are permanently disabled, De Villiers says.
BrightRock CEO Schalk Malan says the company is expecting more temporary disability claims but also a decrease in claims arising from accidents due to fewer vehicles on the road and fewer claims related to other illnesses as a result of additional hygiene and isolation measures.
George Kolbe, head of marketing for Momentum Life Insurance, says Momentum is not anticipating a significant increase in death, permanent disability or critical illness claims, only an increase in income protection claims.
Felix Kagura, head of life assurance at Standard Bank, says the group has the capacity to meet claims that arise and is confident the country will manage the overall effect of the virus.
BrightRock has had an increase in applications for cover over the past few weeks, Malan says, but Kolbe and Kagura say it is too early to tell if applications have increased as many people are focused on working remotely and other issues arising from the lockdown.
Money asked the industry representatives for answers to some of the questions you may have.
Am I covered for Covid-19 by my life cover?
Life cover policies should cover you as long as your death is not attributed to a pre-existing condition excluded from cover on your policy. Self-employed South Africans who fall ill and recover have the greatest chance of claiming for the illness on an income protection policy that has a temporary disability benefit and shorter waiting periods, the assurers say.
Temporary disability cover is vital to prevent a loss of earnings if you are self-employed and don’t enjoy the benefit of paid sick leave that employees do. If your income protection policy does not have this benefit, it will only pay out if your illness is confirmed as permanent, and most coronavirus patients recover from the illness.
Temporary disability income protection benefits are sold with different waiting periods, with seven days the most useful for self-employed people and one month waiting periods appropriate for employed people with the benefit of paid sick leave. Typically, the longer your waiting period, the cheaper your cover.
Malan says the coronavirus is not defined in BrightRock’s policies, but if you have been diagnosed with Covid-19 and are booked off by your doctor for longer than your waiting period, you will be able to claim.
Kolbe says most people who test positive for the virus recover within two weeks if they do not have any complications, which means policyholders with seven-day waiting periods should be able to claim for the second week off work.
If your doctor books you off to isolate yourself for longer than your waiting period, you can claim, Malan says. If your doctor books you off so you can go into quarantine because you have symptoms, you should also be able to claim for the period that exceeds your waiting period, regardless of whether you test positive or negative. If you self-quarantine because you have been exposed to someone with the virus but don’t show any signs of illness, you won’t be able to claim, Malan says.
Kolbe says Momentum only pays income protection claims if you have tested positive for Covid-19, but if you are asymptomatic and compelled to quarantine by the government at a designated state hospital, your claim may be considered on a case-by-case basis, he says.
Will Covid-19 be excluded if I take out cover now?
It is unlikely that life assurers will exclude cover for Covid-19 or any other future pandemic on their policies, De Villiers says, but they are likely to introduce new questions to avoid you applying for cover when you already have the disease. This is known as anti-selecting.
The life assurers Money spoke to confirmed that there won’t be any additional restrictions on your cover for Covid-19 if you take it out now.
However, Kolbe says Momentum will ask specific questions to determine your exposure to the coronavirus. If your answers indicate that you had exposure, Momentum will defer your application for a month. If you have not had exposure, there won’t be any additional waiting periods or exclusions that relate to the virus.
Malan says if you apply for cover and intend travelling overseas in the near future, you may find your cover will exclude benefits if you contract the illness beyond SA’s borders and within 30 days of your return.
Could my claim be denied if I don’t obey the rules?
If you fail to adhere to government recommendations with respect to staying at home, not travelling and not attending gatherings, you may well endanger your own health and life, but insurers may struggle to hold this against you.
Malan says there is no general exclusion that would prevent a claim being paid out because you contravened a government recommendation.
Kagura says travel in SA is always covered but you need to check the policy wording if you travel internationally, especially if you are travelling for more than 90 days. Most policies don’t cover claims that arise from illegal activities, so it is important that you abide by the laws of the land at all times, Kagura says.
Can I claim on a dread disease policy?
The coronavirus is not a defined critical illness event, but should the disease leave permanent damage that meets the criteria for a critical illness claim, Momentum will assess it, Kolbe says. Covid-19 mostly affects your respiratory system and chronic, irreversible end-stage respiratory failure could lead to claims in extreme cases.
Many life assurers have a survival period that prevents you from making a critical illness and death claim for the same illness. Malan says BrightRock does not require you to survive your disability or critical illness event by a certain period.
Hold on to your risk cover
More than an increase in claims, life assurers are concerned about the lack of economic activity and its effect on your income and livelihoods and your ability to secure and maintain the right levels of cover, says Standard Bank’s Kagura.
De Villiers, the deputy chair of the Asisa Life and Risk board committee, says people often only realise the true value of cover in times of crisis. While tough times lie ahead, you should do your best to keep your risk cover, he says.
“Policyholders who are experiencing financial difficulties and who might not be able to afford their premiums should contact their financial adviser or insurer with urgency to discuss potential solutions,” he says.
De Villiers says life insurers are looking at ways to assist policyholders who may be struggling financially as a result of Covid-19 measures, but adds that this will be done on a case-by-case basis.