Pioneering a holistic approach to health and wealth ‘wellness’ through retirement
By Gary Allen, CEO of Sanlam Health Solutions
For families struggling to find enough cash to meet this month’s medical scheme premium, and those stressed about how they will continue to meet these payments into and through retirement; health accredited financial advisers could be just what the doctor ordered!
The impact of above inflation increases on your client’s medical aid premium through retirement is so pronounced, that prudent financial planning requires you to ring fence this cost and apply a higher rate of inflation when providing for it. It is difficult for clients to keep up with medical aid premium escalations when the bulk of their assets are invested in retirement-funding instruments, so the common-sense approach is to make allowances for this as early as possible in the financial plan.
Financial planners are thus encouraged to tackle the healthcare inflation discussion, and give priority to healthcare funding, during their earliest client interactions. At the very least, the financial needs modelling tools used to calculate retirement funding targets should be set to inflate healthcare expenses at a higher rate. More importantly, financial advisers should obtain healthcare accreditation so that they can offer holistic financial planning advice that spans the financial and healthcare disciplines.
From Sanlam Health Solutions’ perspective, there are various ways in which holistic financial advice can give your clients the edge insofar as meeting medical expenses, including soaring medical aid premiums, through retirement. An obvious path is to plan for the inflation-plus medical aid premium scenario early on, and advise your clients to save more each month towards their retirement. Another route is to have an excellent grasp of the solution sets offered by your preferred product providers, and understand the long-term impact these solutions have on your clients retirement outcomes.
We illustrate the potential of holistic planning in delivering market-beating retirement outcomes in the context of Sanlam’s partnership with two respected open medical schemes, Bonitas and FedHealth. Sanlam rewards their clients through Sanlam contributing the equivalent of up to 100% of Risk premium into a long-term Wealth Bonus account. Fedhealth and Bonitas clients, with a Sanlam Risk product, receive an extra 15% contribution into their Wealth Bonus account. The Wealth Bonus account tracks market growth and is designed for use at Retirement. The Wealth Bonus concept helps clients build additional funds at retirement which can potentially be used to address the Post-Retirement Medical Aid funding gap. Wealth Bonus is free to clients allowing clients to earn rewards without contributing a monthly subscription to a rewards programme.
A recipe for planning for post-retirement medical scheme affordability could be to do away with contributing towards rewards programmes; choose an age- and health need -appropriate medical scheme option; consider Network options on your medical aid and use Gap products to allow for out of Network expenses,; consider flexible approaches to Medical Savings Accounts and then, invest for the long term, the monthly cashflow freed up through such a thorough holistic financial plan.
Bonitas and Fedhealth offer a number of creative ways in which Financial Advisers can assist clients in achieving sustainable medical / retirement savings outcomes. With careful planning, health-accredited financial advisers could free up thousands of rand each month to redirect towards endowment products, retirement annuities or top ups on life cover.
ENDS
