PRESENTATION TITLEPRESENTATION TITLE
GOAL CATEGORIES & THE RMM SOLUTION
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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
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FINANCIAL GOAL: LEAVING SUFFICIENT FUNDS BEHIND TO SETTLE OUTSTANDING DEBT AND TAKE CARE OF DEPENDENTS
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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.
PRESENTATION TITLEPRESENTATION TITLE
LIFE PLAN RANGE
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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
PRESENTATION TITLEPRESENTATION TITLE
LIFE PLAN RANGE
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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
Yes No Yes No Yes No
Yes No Yes No Yes No
Yes No Yes No Yes No
Yes No Yes No Yes No
Yes No Yes No Yes No
Yes No Yes No Yes No
PRESENTATION TITLEPRESENTATION TITLE
LIFE PLAN RANGE
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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
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LIFE PLAN RANGE: EXCLUSIONS
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•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
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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.
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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:
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Money Back Guarantee
50% of Cover
100% of Cover6 months
12 months
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On death due to suicide
LIFE PLAN RANGE: FEATURES EXPLAINED
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24 months
Money Back Guarantee
100% of Cover
On disability due to attempted suicide
Money Back Guarantee
PRESENTATION TITLEPRESENTATION TITLE
LIFE PLAN RANGE: FEATURES EXPLAINED
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100% of Cover
On death/disability due to accident
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LIFE PLAN RANGE: FEATURES EXPLAINEDThe Income Assistance Benefit? (N/A for ADDP)
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Waiting period
Death due to natural causes Death due to an accident
Income assistance
portion
Remainder of the benefit
Income assistance
portion
Remainder of the benefit
Less than 6 months No Income
Assistance Benefit
Money Back Guarantee
10% of Cover up to a maximum of
R50 00090% of cover
More than 6 months but less than 12 months
10% of Cover up to a maximum of
R50 00040% of cover
10% of Cover up to a maximum of
R50 00090% of cover
Equal to or more than 12 months
10% of Cover up to a maximum of
R50 00090% of cover
10% of Cover up to a maximum of
R50 00090% of cover
PRESENTATION TITLEPRESENTATION TITLE
LIFE PLAN RANGE: FEATURES EXPLAINED
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Income Assistance activity.
Waiting period
Death due to natural causes Death due to an accident
Income assistance
portion
Remainder of the benefit
Income assistance
portion
Remainder of the benefit
Less than 6 months No Income
Assistance Benefit
Money Back Guarantee
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
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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.
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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.
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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.
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PRESENTATION TITLEPRESENTATION TITLE
LIFE PLAN RANGE: FEATURES EXPLAINED
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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
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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.
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PRESENTATION TITLEPRESENTATION TITLE
LIFE PLAN RANGE: UNDERWRITING PROCESS
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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.
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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
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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
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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.
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PRESENTATION TITLEPRESENTATION TITLE
LIFE PLAN RANGE: CALCULATIONS
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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.
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LIFE PLAN RANGE: CALCULATIONS
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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
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LIFE PLAN RANGE: CALCULATIONS
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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
LIFE PLAN RANGE: CALCULATIONS
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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
COVER RATE PREMIUMR130 000 0.80 R119R230 000 1.00 R245PREMIUM RATE COVER
R140 0.80 R156 250R85 0.90 R77 777.78
COVER RATE PREMIUMR110 000 1.80 R213R200 000 2.00 R415PREMIUM RATE COVER
R145 3.10 R41 935.48R170 1.90 R81 578.95
Cover & premium calculations.
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IMPORTANT STEPS TO FOLLOW WHEN CALCULATING COVER AND PREMIUM FOR THE LIFE PLAN RANGE
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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.)
PRESENTATION TITLEPRESENTATION TITLE
Income Assistance Portion Remainder of the benefitR22 500 (10% of R225 000) R90 000 (40% of R225 000)
QUESTION 1
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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
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QUESTION 2
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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
Income Assistance Portion Remainder of the benefit
R16 764.71 (10% of R167 647.06) R150 882.35 (90% of R167 647.06)
Income Assistance Portion Remainder of the benefit
R0 R167 647.06
PRESENTATION TITLEPRESENTATION TITLE
QUESTION 3
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Petso is 43 years oldRate = 0.90R100 000 × 0.90 ÷ R1000 = R90
Income Assistance Portion Remainder of the benefit
R0 Money Back Guarantee
Income Assistance Portion Remainder of the benefit
R0 R100 000
Income Assistance Portion Remainder of the benefit
R0 R100 000
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