Know Your Money with Bronwyn Waner and Craig Finch
Know Your Money with Bronwyn Waner and Craig Finch
140. Young & Uninsured: Bidvest Life on the Income Protection Gap
Securing your financial future starts much earlier than most of us realise. In this eye-opening conversation with Melody from Bidvest Life, we tackle the critical importance of income protection insurance for young South Africans - a demographic that often believes they're invincible.
Training Specialist, Melody shares her powerful personal story that changed everything: being diagnosed with an autoimmune condition in her twenties rendered her medically uninsurable for life. Now in her forties with a family and property, she faces a protection gap that can never be filled. This cautionary tale underscores why waiting to get coverage can be a devastating mistake.
We explore the innovative Bidvest Life approach to protecting students as young as 17 - even before they earn an income. For just R150 monthly, young people can secure substantial coverage that follows them from matric through university and into their careers. The conversation highlights real claims that demonstrate the value of early protection, including a university student who will receive R23 million in lifetime benefits after a hit-and-run accident left him permanently disabled.
Perhaps most valuable is Bidvest's conversion privilege, allowing students to transition to comprehensive coverage upon graduation without medical underwriting - even if they've already claimed for conditions like cancer. This feature provides invaluable continuity regardless of health changes during student years.
Your ability to earn an income is your greatest financial asset - worth millions over your lifetime. Yet for young people without accumulated wealth, it's often the least protected asset. Don't wait until it's too late. Contact your financial planner to learn how affordable protection can secure your future today, regardless of what tomorrow might bring.
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www.growthfp.co.za
Hello everybody, welcome to Know your Money. I'm Bronwyn Wehner.
Speaker 2:And I'm Craig Finch, and we are from Growth Financial Planning. We hope you enjoy our podcast.
Speaker 1:Hello everybody. We have Melody from BitVest Life back in the studio just to talk about some of BitVest's features, and today we just wanted to talk about the importance of income protection, especially for the younger generation. I know BitVest has a really good way of doing that, especially students and people early in the market. So thank you for joining us, melody, thank you for having me. Good to see you again.
Speaker 3:Good to see you. So, yeah, I think young people tend to think they're invincible and, yeah, I'll get it later. I don't need cover, it's for older people, I don't have dependents yet or that sort of thing. But the reality is is that things happen to young people and, you know, when we look at our claim statistics and I've read a couple of claim stats from other insurance and other insurers in the industry and they're seeing the same trend that more and more young people are claiming. So there's definitely a need for younger clients to have cover in place, myself included.
Speaker 3:When I first came into this industry I was not as gray as I am now, but I thought you know, I'm still quite young, I'm still figuring things out.
Speaker 3:I'll just, you know, take a little bit of cover and then you know, later on, once I know what I'm earning and all of that, I'll more cover and not knowing that literally six months later I'd be diagnosed with an autoimmune condition which has now rendered me medically uninsurable for the rest of my life.
Speaker 3:So the little bit of cover that I've got as a 20-something-year-old single, not married, no property, no kids, no dependents. Now in my 40s, I'm married, I've got property, I've got kids, but my financial plan is not enough. I have this ginormous gap because my health means that I can't get cover. So it's really, really, really important that you start getting cover as young as possible and with BitVest Life we can start covering someone from the age of 17. On an income benefit which I think is really phenomenal. We've got quite a few matric students on the books. We've had quite a few claims from those matric students, especially our rugby players, and that cover follows them into being a student and then, when they graduate, into the careers that they follow from there. So really, really important.
Speaker 1:So can you tell us how a 17-year-old gets covered or how that starts?
Speaker 3:So can you tell us how a 17-year-old gets covered or how that starts? So, first off, it might sound a bit counterintuitive getting income protection to someone who doesn't earn an income. What's that all about? Yes, that student might not be earning an income, but the parent is financially responsible for that child through school, through their studies. So if something happens to that student, that they can't finish their studies or they have to delay their studies or maybe can never enter the job market, they're going to be financially dependent on that parent. So it's really the parent protecting their income in case something happens to that child.
Speaker 1:So is the 17-year-old in university, not in the church?
Speaker 3:No, so they can be in high school. It's just the minimum entry age is 17,. Age 18 next. So it could be a matric student or it could be someone after school. If they're in school, that's fine. If they're a student, a tertiary student, they have to be in full-time tertiary studies to qualify as a student. Obviously, if they're not a full-time student, they're probably working and they could then cover their income?
Speaker 4:Do students get a lower premium, and is it also then backed by their parents, so to speak?
Speaker 3:So well, I mean, it can be either way. Either the parent can pay for it or the student can pay for it. We're not fussy around that. But yes, because they're young and they're generally healthy.
Speaker 3:The premiums are quite cheap, so it is actually quite affordable. I think we recently did one just a little case study. An 18-year-old non-smoking male had, I think, 18,000 Rand event-based income, which is our temporary income benefit. They had 18,000 Rand extended income benefit. They had 100,000 Rand disability and critical illness lump sum and they had future cover protector on top of that and it came to a premium of about 150 rand, which is really really really affordable.
Speaker 1:How would you insure them? A trick for 18? How do you get to that number? Or do they have to be going to studying something?
Speaker 3:So they can give us based on the parents income. So they can give us the parents' income on the quotation, like you would add in a spouse's income for someone else.
Speaker 1:Is there a minimum?
Speaker 3:The minimum for any income protection with us is a thousand rand a month. So they can take whatever it is they can afford. The minimum premium is a hundred rand. So because they're young and the premium is quite cheap, they actually have to add quite a few benefits just to get to the minimum premium requirement. But yeah, we can give them 18,000. And, like I said, whether the parent pays the premium or the child pays the premium, that doesn't matter, but it's on the child's life, so the child's health is underwritten at that point.
Speaker 2:Yeah, I have a cousin and she's in her 70s now and very sadly she was run over by a car crossing the road from school. I think she was 13, so it wouldn't have applied now, but just the impact on the family because her parents are passed away a while back. Luckily there's a big extended family with brothers and sisters, so they've had to step in and help or make sure that Charmaine's got cover where she is in her home.
Speaker 3:So I can tell you a story exactly on that. A student that we had covered his parents had the foresight to take income protection when he went to university. Exact same thing happened to him walking Someone hits him with a cart was a hit and run. They left him there on the side of the road and he now has permanent nerve damage in his arm, can't use his left arm anymore. I don't know what he was studying, but like let's imagine he was studying to do something that would require manual labor. I mean, now he has to completely pivot what his life plan was.
Speaker 3:Because they had student cover with us, he got income protection, temporary income protection, for 24 months. After the 24 months they determined. At that stage they determined that he had permanent damage. He had various operations, all sorts of things. So he's been deemed permanently disabled. He's now getting that monthly income until he turns 70. I think his policy was until 70. So in total that's going to be over 23 million Rand that we're going to pay to him. Yes, he might be able to pivot and go into some other career, but that new career he might be earning surgeon, as an example.
Speaker 1:So even if he goes into a different career and earns an income, you'll still provide that income.
Speaker 3:We'll still when a claim, an income protection claim, is permanent, you've been deemed permanently disabled. We won't aggregate at all against any other income that you can earn from any other job that you can do.
Speaker 4:Another odd question yes, what happens if you are injured while abroad or on a gap year or something like that? Does the cover still stand?
Speaker 3:That's a good question. So first, off abroad. We do cover people going overseas, whether it's just for a while or you're immigrating there. As long as you still have a South African bank account that we can debit or pay your claims into, then that's fine. You can take your cover with you. We do have unfortunately it won't be on the student cover itself, but on the comprehensive cover we've got something called the sabbatical option, where if you decide to take a gap year, you want to take a sabbatical for work from work for a year, you want to go have your you pray, love moment overseas, or something like that. We'll keep your cover in place. There's some changes that we'll make. We'll make your waiting period a bit longer. If you had any business cover on, we'd remove the business cover because you're obviously not going to work in your business and then after that 12 month period, when you come to work, your cover just reinstates back to what it was before.
Speaker 4:Yeah, I had a similar thing when I went on tour for an extended period of time, for six months. It was discovery years ago and they allowed me to take a break, but then come back, yeah yeah, so we have various mechanisms like that built in, but it'll depend where you go to.
Speaker 2:You can't go anywhere.
Speaker 3:It's also going to depend Geographically. There are some places that are not safe, if you're going to a red list country, so like if you're going to Afghanistan, you're going to the Ukraine, you're going to Israel, any kind of war-torn country, a couple of African countries as well, where you won't be covered, just because the risk in that country is so high.
Speaker 2:So if you do move you must tell the insurance company, absolutely, absolutely.
Speaker 4:You need to check with us if you'll be covered in that country.
Speaker 3:So if you just go on holiday, though, and something happens, you're covered, you're fine.
Speaker 4:Yeah, no, that's fine, I just wondered if it was like a weird thing that it's only if it happens in South Africa.
Speaker 2:But, warren, you'll be paid in the currency you are In, whichever country you're in. Yeah, we'll pay Back to SA bank. Sa you, yeah, yeah, okay.
Speaker 3:But yeah. So just back to income protection for young people. So I mean, that was an example of a student that had a permanent injury and so we're taking care of that student for the rest of his life. We had another example, not as severe, for the rest of his life. We had another example, not as severe, I think second or third year student had stage two skin cancer and students can also have critical illness income. So we spoke about CI income on our previous episode.
Speaker 3:So he got a full year, full 12 months at 130% for that skin cancer and built into how the product works when that student graduates and he now starts working. So let's say he graduates, he becomes an accountant. As an accountant he qualifies for our comprehensive cover. He's currently on the event-based product. He can do a conversion from event-based to comprehensive without any medical underwriting, do a conversion from event-based to comprehensive without any medical underwriting.
Speaker 3:He just has to answer three questions psychological questions have you been diagnosed with depression or anxiety? Have you taken any antidepressants? Have you ever had any suicidal thoughts or attempts? If they say yes to any one of those questions, there could be a psychological exclusion, but there'll be no other medical exclusion. So, despite the fact that he's already claimed for stage two cancer. He's now converting over to comprehensive cover, no cancer exclusion. If that cancer comes back somewhere in future he's still able to claim on his policy. Can he increase the cover? He can increase the cover, but the increased cover will then be underwritten. But if he had 18,000 Rand as a student, he can get 18,000 Rand converted like for like, free of underwriting, and then whatever increases they have they underwrite.
Speaker 4:You referenced events versus comprehensive.
Speaker 3:Event-based cover versus comprehensive cover, so it's event student, basically. So we're going to talk about event-based cover in a bit more detail later on, but typically the event-based cover is for people who are in occupations who generally don't qualify for traditional comprehensive income protection.
Speaker 1:So a student wouldn't normally qualify because they're not earning an income.
Speaker 4:Right. That's why it's event.
Speaker 3:Yeah, so it's based on specific events that happened to them. So it's based on specific events that happen to them, so you just prove that this event has happened and we'll pay that instead of where for like cover that we would have would say can you do your job or not? If you can't do your job, we pay.
Speaker 2:But this is a great benefit is that the student studying law in most other companies is not covered. They will be covered when they become a lawyer, but they cover them right from being a student and then converting to a lawyer, for example, as an example. But for our practice we've always looked at from the cover perspective that income protection is for me my personal opinion the most important cover.
Speaker 1:Absolutely.
Speaker 2:Because you just quoted 23 million. You just do the maths on a 40, 30-year career with escalation of what you are going to earn and if something happened to you, that's a real calamity.
Speaker 3:That's exactly it, because and this is again what young people don't think about but your ability to earn an income is your biggest asset. You know older people have properties, so if something happens and you have to, you know in a crunch you can sell your property and use that money, or you've got investments or something. But as a student or a first time income earner you've got nothing. Selling your phone is not going to take care of you. So protecting that income is incredibly important, even if they could qualify well. Actually, if you do like you say, if you do the calculation, if we did the financial needs analysis for this 23-year-old and we see that his ability to earn an income is worth 23 million Rand, he wouldn't even qualify for 23 million Rand on lump sum cover because he doesn't earn enough for that.
Speaker 3:So really, income protection absolutely is the foundation because it's affordable compared to a lump sum benefit for what you need. It's much simpler to claim on it than it is for a disability lump sum benefit because that requires you to be permanently disabled and statistically we see it's a very small amount of people who actually meet that permanence bar. And yeah, it's a no brainer if you're young, it's that income protection that's going to pay for everything else that you have medical aid, school fees, whatever it might be.
Speaker 1:Awesome. Thank you so much. Very insightful.
Speaker 2:Thank you. See you next time. Thank you for listening. If you have enjoyed this podcast and would like to subscribe, please visit our website wwwgrowthfpcoza. The information we have provided in this podcast is our personal opinion. Wwwgrowthfpcoza. The information we have provided in this podcast is our personal opinion. No-transcript.