• Petrie Marx

Sanlam offers clients COVID-19 relief

The Covid-19 pandemic is heightening awareness of the life risks we collectively face, and the role insurers can play in keeping families more resilient. However, the pandemic’s unprecedented impact on the finances of myriad people means many are reprioritising and considering cutting cover completely. Leading financial services provider Sanlam is urging clients to rather opt for premium relief or a premium holiday during this time.

Cancelling life assurance cover altogether means there’s no protection for individuals or their families should they be rendered unable to earn an income through disability or death. Amid a cash flow crisis, Sanlam is urging clients to seek advice and a holistic plan from trusted financial advisers. Petrie Marx, Product Actuary at Sanlam, says the Group’s intermediary partners are well positioned to serve clients remotely right now, “South Africa’s economy is on its knees. People across the country are impacted. Financial advisers can play a pivotal role in helping individuals view their situations objectively and make the best possible decisions in a very difficult time.”

Here’s how Sanlam has adjusted its business to partner with clients during this time:

1. New underwriting guidelines

Sanlam remains open for business and continues to offer clients new cover. However, it has dramatically adapted its underwriting during this time. It will postpone all medical tests until it is deemed safe to conduct these again.

Applicants will be assessed in terms of risk, and those that meet certain conditions may immediately be issued policies, with the understanding that certain medical tests be done at a later stage. Applicants with a significant burden of disease will be deferred for further testing and will remain in new business queues until it is safe to conduct these. Significant cover amounts remain available, with an individual under 45 years old able to qualify for up to R12 million in death and disability cover. With ‘riskier’ benefits like severe illness and dread disease, clients can qualify for up to R2 million in cover.

Once a case has been issued, the client will receive full cover from day one. However, the terms may change after the medical tests are done, should the outcome of these be different to the initial underwriting assumption.

2. Premium relief

Step one should always be trimming the budget of unnecessary expenditure. Cutting cover should be a last resort – however Sanlam recognises that many may need to reduce premiums.

To help clients avoid lapsed policies, Sanlam is offering cover flexibility, with corresponding premium reductions of up to 50%. The purpose of this provision is to help individuals work alongside their financial advisers to reprioritise their risk cover needs over the short-term, with the ability to increase cover back to previous levels without medical underwriting.

How it works:

Clients can reduce their life, disability and critical illness cover by half. They must do so before 1 July. Then, they have the option to increase cover back to a maximum of what it initially was, within three to six months, with proof-free underwriting (i.e. no additional medical information needed).

Note that 50% of the benefit must be retained to recover 100% of the previous level. An example: A client who reduces cover to exactly 50% of the previous level, can double cover back to 100% of its previous level. But a client who reduces cover to 40% of the previous level can still only double cover back to a maximum of 80% of its previous level.

Another thing to be aware of: The increased portion of cover will be charged at the client’s current age and using the latest premium rates.

3. Premium holiday

Sanlam recognises that many of its clients will simply have no option but to stop paying premiums for a while. Given this, the group is offering a premium holiday option with free ex-gratia cover (ex-gratia means ‘by favour’ and refers to an action done voluntarily, out of grace, with no obligation from the recipient).

Qualifying clients (those with a squeaky-clean record, who pay via debit order) who now cannot pay premiums can suspend these for a period of three months. Then, upon receipt of the first premium, cover automatically reinstates.

In the first month following an unpaid premium, a clie