Know Your Money with Bronwyn Waner and Craig Finch
Know Your Money with Bronwyn Waner and Craig Finch
139. The 130% Solution: How Bidvest Life Reimagined Critical Illness Cover
What happens when critical illness strikes but you can still work? Most income protection policies won't pay a cent, leaving you financially vulnerable during life's most challenging moments.
In this revealing conversation with Melody from Bidvest Life, we uncover a revolutionary approach to critical illness protection that addresses the significant gaps in traditional coverage. While conventional income benefits require you to be continuously unable to work before payments begin, Bidvest's CI Income benefit pays upon diagnosis alone – regardless of whether you're still working.
Melody walks us through the three major problems with traditional income protection for critical illness: patients rarely meet waiting period requirements, benefits stop immediately when doctors clear you for work (despite emotional recovery needs), and standard payments don't account for the additional expenses serious illness brings.
The solution? A guaranteed 12-month income benefit that pays 130% of your net income immediately upon diagnosis of conditions like cancer, heart attack, stroke, or other listed critical illnesses. This benefit continues even if you return to work, giving you crucial financial breathing room during treatment and recovery.
We explore a powerful real-world example of a 27-year-old teacher diagnosed with eye melanoma whose guaranteed income allowed her to make life-changing decisions about work and family support during treatment – something traditional coverage would never have permitted.
The episode also covers innovative features like extended income protection without requiring permanent disability, coverage until age 75, and the ability to convert income benefits to lump-sum coverage at retirement without medical underwriting.
Whether you're young and healthy or approaching retirement, this conversation reveals why understanding the nuances of critical illness coverage could make all the difference when life happens. Subscribe to Know Your Money for more insights that help protect your financial future.
Please subscribe to our podcast or have a look at our website
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. Hello everybody, and welcome Melody to the studio for a series of explanations on BitVest Life, one of the product providers that we use at our company. Look forward to chatting to you today, and I think we're starting off with critical illness.
Speaker 3:Absolutely. Thank you so much for having me and for giving me this opportunity to chat to you guys. I'm excited to tell you more about what we have to offer.
Speaker 2:So critical illness for the people out there. In simple terms, what is it?
Speaker 3:So critical illness cover is for those big scary things that we worry about Getting cancer, having a heart attack, heart surgery, stroke, any dread disease really and essentially, traditionally speaking, in the industry, critical illness is normally covered with a lump sum benefit. So you take out, let's say, a hundred thousand round lump sum cover and should you be diagnosed with stage one cancer, that could potentially result in a 25% payout, depending on the severity. The more severe the condition, the bigger the percentage payout that you get. But we do also offer an income benefit that was specifically designed to deal with critical illnesses.
Speaker 2:And how does that income benefit work?
Speaker 3:So I think, before talking about how it works, I think it's really important to understand what the problems were that people dealt with when they had a critical illness and they wanted to go through a claim with a traditional income benefit.
Speaker 3:So traditionally, an income benefit, a temporary income benefit, a claim will pay if you are occupationally disabled, meaning you're unable to do your job for a period of time.
Speaker 3:And before we designed our product, you know we didn't want to just do a copy and paste of what was already in the market.
Speaker 3:We wanted to understand what was in the market and how it worked and didn't work and then find a solution to fix that. And so when we spoke to people who had a critical illness of some sort and went through that claim, the big problem they told us was the fact that when you're diagnosed with some sort of critical illness, you're not necessarily booked off from work every single time. You know, if you've got a stage one cancer, still going to work every single day, you might be off a day or two every couple of weeks to go for treatment. But other than that, life kind of carries on. And so the problem with that is is that people aren't booked off long enough to meet their waiting period is that people aren't booked off long enough to meet their waiting period. And even if they can meet a waiting period, it's not consistent, so they're not deemed occupationally disabled and therefore, that income benefit just won't trigger a claim.
Speaker 2:Yeah, so the waiting period is that there is a waiting period before you get your income paid out.
Speaker 3:Exactly that's how income benefits traditionally work, because you have to be off continuously for 30 days. If you're still off on day 31,. It'll start paying all seven days, or 14 days, whatever it is, and the reality is that most people don't meet that waiting period.
Speaker 1:Yeah, I was going to just kind of break down what the waiting periods are, that you can have different ones. And your example is so true because I've had quite a few clients that have had a heart attack and it literally happens on the Thursday and they're back at work on the Monday because you know, health has become so good at sorting out those problems that you do just go back, but the person actually needs a time to rest, exactly.
Speaker 3:Which is really important, exactly so. That's the other problem that people told us was, even if they were occupationally disabled for however long. Traditionally, again, an income benefit only pays if you're occupation disabled. So as soon as the doctor says you're well enough to go back to work, that's the end of your claim, the claim stops. But what people were telling us was physically, the doctor might say I'm okay, but mentally and emotionally I need some time to kind of just recuperate from what I've been going through.
Speaker 3:And we actually we had a financial advisor at the time. He had cancer himself and that's what he told us. On the Friday he went to the doctor. They said you're in remission Amazing news. He phoned the claims department that afternoon and went doctor's cleared me I'm going back to work on Monday and he has to go back to work because he had to put food on the table for his family. But what he told us was is, at that point in time, when he was told he's in remission, all he really wanted to do was load the family in the car and go off into the bush somewhere and just go spend time as a family and just recuperate and rest and just kind of pull himself towards himself before going back to work.
Speaker 3:But he couldn't do that because of how a traditional income benefit pays. And then the third problem they told us about was if they were lucky enough to have a temporary income claim pay. It pays 100% of your net income and that income is already budgeted to go towards your everyday expenses bond, car, school fees, food, whatever. And now that you have this critical illness, there are a lot of unexpected expenses that have come along with that, from dietary changes to supplements that medical aid doesn't necessarily pay for, or experimental treatments that medical aid doesn't necessarily pay for, or experimental treatments that medical aid doesn't pay for. Traveling costs to get to the doctor. Not everybody lives in a big city. There are a lot of people that have to travel really really far to get to their treatment center. So all of that comes at a great expense that you hadn't necessarily budgeted for, and so, knowing that those were the real problems that people were dealing with, we set out to find some sort of solution.
Speaker 3:Obviously, a critical illness lump sum benefit is absolutely a must-have, because that once-off lump sum that gets paid out is a great help to pay for hospital bills and things where medical aid maybe had run out.
Speaker 3:But from an income perspective, they needed a solution and so we created the CI income benefit critical illness income benefit and with us that's an add-on benefit that you add on to your temporary income protector. And should you be diagnosed with a listed critical illness, instead of having your temporary income benefit pay out that's going to expect you to be occupationally disabled we pay you the CI income benefit and what that does is firstly, from a claims perspective, going through the claims process rather than getting the client to run around every single time they go for treatment and get a new doctor's PMA filled out, which can take weeks, if not months, to get that documentation back from a doctor, because that's obviously not their main priority Doing tests and scans and paying for those things and getting forms and all of that. Instead of doing all of that running around to prove they can't do their job because in most instances they can we purely assess the claim on diagnosis. So if the documentation says you've been diagnosed with cancer or you are in renal failure, Does it matter?
Speaker 3:what stage of cancer Doesn't matter what stage of cancer. So from stage one to stage four. So for the four SCIDIP conditions heart attack, stroke, coronary artery bypass graft and cancer it doesn't matter what the stage is. And then we have a whole list of other critical illnesses as well. So purely being diagnosed with that condition is what's going to trigger the claim, so we only assess it once, and then the claim is guaranteed for the next year, so you get 12 months minus whatever your waiting period is. So, for an example, if you've got a 30 day waiting period, you're going to get an 11 month payout. The pleasure is, though, you don't have to sit and wait your 30 days before we pay. We pay the first two months on acceptance of the claim, immediately. We minus we basically minus the waiting period off the end.
Speaker 4:Sorry, just so I understand what exactly is a waiting period with respect to what we're talking about here.
Speaker 3:So, generally speaking, for income protection, the waiting period is the time that you have to be unable to do your job before you can get a claim.
Speaker 4:So after you've been diagnosed.
Speaker 3:So typically it would be. I have cancer. I've been booked off for a week or two for treatment, but I have a 30-day waiting period on my policy. It means I'm not going to have a claim because my 30-day waiting period dictates that I have to be off consecutively for 30 days. If on day 31, I'm still unable to do my job, then they'll pay going forward. And that's exactly the problem is that most people at first when they're diagnosed, aren't booked off from work.
Speaker 4:And also they can still go to work.
Speaker 1:People also don't necessarily know what their waiting periods are on their policies and then they kind of get frustrated. That okay, but now I have a 30-day waiting period, but you said I have income protection, so it's kind of from day one. So the lines can get blurred and often people will have like a cheaper premium with someone else, but that provider's now giving you a 90-day waiting period, whereas you were on a seven-day waiting period. I understand.
Speaker 4:The pricing for that would be very different. So it's really important to know what your waiting period is, because they're hedging their bets that you're going to go back to work within the 90 days.
Speaker 3:Exactly.
Speaker 4:Exactly, and so that's what makes.
Speaker 3:CI income so special is that it doesn't care about the waiting period. It doesn't care whether you can do your job or not. Merely the fact that you've been diagnosed with this big scary thing is what's going to trigger the care and what is the amount that it will cover. So it's going to pay you. Instead of just paying 100% of your net income, it's paying 130% of your net income.
Speaker 3:That additional 30% is there to help with those unexpected additional expenses, like we were saying earlier on the travel and the food and the whatever the car portion is 30 is an additional 30 on top of so if you only had the temporary income protector and you were diagnosed with with a critical illness, you would get a hundred percent payout, but maybe just for a couple of days or for as long as you've been booked off and so does this pay.
Speaker 4:The payout continues until the doctor says you can go back to work.
Speaker 3:No, so it's a set period of a year. It's 12 months less the waiting period. So for someone who's got a seven-day waiting period, we backdate it. Two-day day one, you get the full 12 months. If you've got a 14-day waiting period, it's 365 days minus 14. If you've got a 30-day waiting period, it's minus the 30 days, but you get the money immediately. Regardless of what the waiting period is, you're diagnosed, the claim is accepted, it's guaranteed the first two months of income you get on acceptance of the claim.
Speaker 2:So there's a good chance you're not going to get the or not, depending on the claim, though you're going to get maybe paid one month income protection maybe but that you're going to get paid for the year, Absolutely CI income you're going to get that claim, so you get.
Speaker 3:CI and temporary no, so the CI income overrides the temporary income benefit.
Speaker 4:And what happens at the end of the first year.
Speaker 3:So then at the end of that year, you know, we then reassess if you are at the end of the first year. So then at the end of that year, you know, we then reassess. If you are at the end of that year you're still unable to do your job. You know, if it's so severe that you can't do your job, the claim will continue on your temporary income benefit for as long as you are occupationally disabled. Only difference is now we're just paying 100% of your income instead of that boosted amount.
Speaker 4:So it goes from 130% in the first year to 100% in the next year, to 100%, if you still can't work.
Speaker 3:If you still can't work. If after two years you still can't work, we go into our extended income protection claim. We don't require you to be permanently unable to do your job, Just the mere fact that you can't go and do your job we will continue paying that.
Speaker 3:The temporary income and the extended income protection. So that is something that sets us apart from quite a few of our competitors is that for an extended claim so from year three onwards we don't require you to be permanently disabled in order to get 100% of your income paid out to you.
Speaker 4:What's the longest you've ever done? The temporary one, for.
Speaker 3:So a temporary claim can only pay for as long as a temporary income protection term, which is 24 months, but then it can kick over into the extended claim.
Speaker 4:Which is a permanent.
Speaker 3:We don't require you to be permanent.
Speaker 1:So the extended claim is up to 36 months, which is a permanent. We don't require you to be permanent, that's the key. So the extended claim is up to 36 months.
Speaker 3:No, so the extended claims is anywhere from year three until retirement age. So you might never be deemed permanently disabled, but you're not able to do your job or you're partially not able to do your job. We will continue paying you your income.
Speaker 4:Is that unique to Bitvest? We will continue paying you your income, is that?
Speaker 3:unique to Bitvest. So many companies, most companies, have an extended income benefit that pays from year three onwards, but they are in the market as a whole. They are T's and C's. So there are a couple of companies where the T's and C's are you have to be permanently disabled to get 100%. If you're only temporarily disabled, injured, ill, you only get 75% of your income, which to us doesn't really make sense, because if you've not been able to work for two, three, four years, your expenses don't suddenly decrease by 25%.
Speaker 4:They usually go up.
Speaker 3:Exactly, they actually go up, so why decrease the amount that you get? So with us, it's really important for us that we want to make sure that people are okay, that they're covered, so we don't have that permanence requirement, these specific things, and it's usually something to do with mental health. Quite often it's got something to do with neck and spine, musculoskeletal cognitive impairment. If you're claiming for any one of those conditions, then they limit your payouts again either to 75% or 70%, and with us we don't have a list of events like that.
Speaker 4:So you don't have an exclusionary list. No, can I ask one more question, because I don't know a lot about this and that's why I'm kind of here. You said 7 days, 14 days, 30 days. Well, what is it just more expensive to get a 7 day one?
Speaker 3:So we're actually we're going to talk about that in the next episode. So I don't know if you want to talk about that now or leave that, but it is more expensive.
Speaker 2:Because, the likelihood of it paying out is a lot higher than a 30-day or a 90-day waiting period.
Speaker 3:But maybe in the next episode you can ask me that question again and we can go into some detail around that.
Speaker 2:Critical illness benefit pays. In summary, it pays for a year. Yes, depending on your severe illness that you have.
Speaker 3:Yeah, so it has to be one of the listed severe illnesses, but immediately it pays it pays immediately, regardless of whether you can do your job. All we require is that you are diagnosed. So we just need to get the paperwork once to prove that you've been diagnosed, and then we pay that 30% of 130% of whatever your underlying.
Speaker 4:And the first year is guaranteed.
Speaker 3:Absolutely guaranteed.
Speaker 4:And if you go back to work in the first year, doesn't?
Speaker 3:matter, it's going to keep paying. So I'll tell you why that's important. So we had a claim and for any young listeners listening like really listen hard, yeah, because I think a lot of young people think, oh, it's not going to happen to me, I'm young, I'm healthy, it's older people that need it. Uh, we had a client, shireen, at 27 years old she went to renew her driver's license, did the eye test and kind of realized like things are looking a bit funny. So she went for a proper eye test and she was diagnosed with melanoma in her right eye and so she had to go through a lengthy series of treatments. She had to get injections into her eye. For a period of time she was booked off of work, but just a couple of weeks Then she could go back to work. But part of her recovery was that she couldn't actually be in the class with the kids teaching because she couldn't look at the board and that sort of thing.
Speaker 3:She luckily had CI income with us, got the guaranteed payment for the year, and the difference that made to her was her family. Well, she lived quite far away from her family. She was on her own. Um, I think she came from Benoni and she was teaching there and as a teacher you know you can't just leave your job in the middle of a year and expect to find a job quickly elsewhere, because obviously you know there's terms and so on.
Speaker 3:But because she had CI income and she had this big scare, she kind of re-eval went. You know, actually I really want to be closer to my family and spend time with my family. Because she had that guaranteed income for a year, she could take that brave step to say let me resign from my job so that I can move closer to my family. I've got time to find another job for next year, but in the meantime BitVest Life is taking care of me and I think that to me is the power of what CI income means to a client. And our motto is when life happens we show up. And it was really great to see that when life happened to her we were able to show up for her and not only did it help her with paying for treatments and monthly expenses, it helped her make that big, life-changing decision.
Speaker 4:Can I ask one more question? Besides obviously having one of the severe illnesses if one wants to get cover, is there anything exclusionary?
Speaker 3:So it's going to depend if you've got a pre-existing condition. So obviously, anytime you apply for any kind of life cover, you're going to go through medical underwriting. So if you have a pre-existing condition either it could mean that you could get a loading on your premium, meaning you're going to pay slightly more because you have a higher chance of claiming. So we just need to protect that risk pool and make sure there's money available for everyone to claim. So you could have that learning. You could have an exclusion that says we're going to cover you for everything except that particular condition you already have, or you could completely be declined cover depending on how severe the particular condition is that you have.
Speaker 2:That's why it's important to take it early in life, when you're young, absolutely, and you can get the cover, because at my age you've got no chance. You've got no chance. Are you saying nothing?
Speaker 4:Yeah, I don't think so.
Speaker 3:Maybe just to end off, just because you've mentioned your age. One of the nice things with our CI income benefit is when you've reached the end of your temporary income term. So typically people take it until retirement age. So when you reach your selected retirement age that benefit's going to fall off of the policy. Now, because CI income is attached to the temporary income protector, when TIP falls off, in theory CI income would fall off as well. But we know that at that age you are at an even higher risk to have some sort of critical illness happen to you. And because you're older and because you've got pre-existing conditions, the chances of you getting critical illness cover at that age is quite slim. So we have an underwriting-free conversion where you can convert your critical illness income benefit into a critical illness lump sum benefit without any underwriting. So even if you've got a pre-existing condition you're not going to have unless you've claimed. If you've claimed you'll have an exclusion for that condition that you've claimed for.
Speaker 3:But other than that, you're getting a benefit when you need it, when in most instances you won't get that cover at that age.
Speaker 1:And how long would that need to be on your policy in order to do that? So, say, a client is 64 and he puts it on.
Speaker 3:There's no requirement in terms of how long you've been on that cover.
Speaker 2:It's merely you had it on your cover at.
Speaker 3:C's age, you can do that conversion and it's basically whatever your income protection cover amount is at that age times 130%, because CI income gives you that boosted amount times 12 or 11, if you've had a 30-day waiting period and whatever that comes to, that's the amount of lump sum critical illness that you can get without any underwriting.
Speaker 4:One more weird question. So what's the state retirement age?
Speaker 1:65. Is it for?
Speaker 2:both men and women, or to get what the SOSA benefit.
Speaker 4:No. So when it comes to, obviously, income protection, it stops, like you just said, at retirement age. What happens if you work past 65?
Speaker 3:That's an excellent question. So typically in the industry, income benefits stop at 65 or 70. We have income protection until age 75. Because the world of work is changing. People are working longer, whether it's because they just enjoy what they're doing or because they, frankly, can't afford to retire and I think that's probably the majority of people can't afford to retire and so it's important to be able to protect people's income for as long as possible, and so we take it all the way up to 75.
Speaker 4:That's very good. I was just thinking of my uncle. He's 71. He's still working. He loves it, though he loves it. He's 71 and he's still working.
Speaker 2:He loves it, though he loves it. Thank you so much. We'll be catching up with a lot of benefits in other episodes.
Speaker 3:Fantastic. Thank you so much for having me. Thank you.
Speaker 2: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. For more detailed information, please discuss your financial situation with a financial planner.