Disability Cover Past Age 70? FMI Has The Answer

Whole of Life today

Most Income Protection policies in the market have a traditional cease age between 60 and 65 (expected retirement age) while FMI offers cease ages of 55, 60, 65 and 70.This means that, if your client continues to work past that age and suffers a disability, they won’t have income protection. The good news is that the South African insurance market has recently started offering Whole of Life (WOL) benefits as an option on Income Protection policies. This allows the policyholder some form of disability cover beyond traditional retirement ages, for the remainder of their life to meet a particular need - the risk of a medical condition after age 70 reducing their income as a result of the additional expenses associated with these conditions.

What's really on offer?

If the policyholder is disabled before retirement, WOL benefits promise a life-time benefit, if they are functionally impaired at age 70, that will subsidise retirement savings and cover medical expenses. If the policyholder is disabled after retirement, the benefit will provide functional impairment cover that will cover the costs associated with suffering a functional impairment, provided that the policyholder is functionally impaired.

However, if the policyholder is occupationally disabled beyond age 70 these benefits offer no cover and, in the case of functional impairments, although a life-time benefit, there is no guarantee that the benefit will pay out for a life-time due to functional impairment reassessments conducted throughout the life of the claim. These traditional WOL benefits also do not cover individuals working past traditional retirement ages. Consider the implications. If your client works past their policy’s retirement age, they’re not covered. If your client is retired but suffers a disability that is not a functional impairment, they’re not covered.

FMI's Retirement Extender option is the answer

We agree that the risk of a medical condition after retirement can lead to a serious impact on your client’s income but we also believe cover post age 70 should be taken a step further. Research shows that people are working to older ages. These individuals have a real need for temporary income protection that pays on their temporary inability to perform their occupation beyond age 70. That’s where our Retirement Extender option comes in.

This option is selected at application stage. Policyholders that have the Temporary Income Protector can add the Temporary Income Protector 75 (TIP 75) component while policies that have the Extended Income Protector can select the Long-term Care Protector:

• TIP 75: Provides temporary disability cover for those working after age 70. Pays on the individual’s inability to perform their occupation beyond age 70 due to a temporary accident or illness (which would not be covered by Functional Impairment cover). If the Life Insured is in EIP claim at retirement, the TIP 75 option falls away. Also, the premium for the extra 5 years of cover is only payable if and when the TIP 75 is exercised – no pre-funding required!
• Long-term Care Protector: Addresses the Whole of Life need by paying an income for life for functional impairment. If the Life Insured is in an Extended Income Protector claim at retirement and the condition qualifies against FMI’s functional impairment criteria, we will pay 75% of your pre-retirement benefit for life. If the Life Insured is not in claim at retirement, the client will enjoy post-retirement functional impairment cover that will pay for the rest of their life if they claim. With no waiting period, payments will commence as soon as permanence of the impairment is established.
  

With FMI’s Retirement Extender option, your client’s income will be protected with a whole of life benefit that truly responds to the needs of today’s market. To learn more about BPE and the 2013 enhancements, including the Retirement Extender option, visit the FMI website.

Policyholders who have a BPE policy can upgrade their policy to include all or a selection of the BPE enhancements, the majority of which will be available without underwriting. For more information of these upgrades, contact FMI’s Client Care team on 086 010 1119.