Know Your Money with Bronwyn Waner and Craig Finch
Know Your Money with Bronwyn Waner and Craig Finch
151. Brightrock - Rethinking Life Insurance: The Premium Asset You Didn't Know You Had
What if your life insurance actually understood your changing needs over time? Sean Hanlon, Executive Director at BrightRock, returns to challenge everything you thought you knew about protecting your financial future.
Most insurance companies sell you a "chunk of life cover" without truly understanding your needs. Sean reveals why income protection—your ability to earn until retirement—is actually your family's most valuable asset yet remains grossly undersold in South Africa. BrightRock's revolutionary approach splits protection into categories that reflect real life: household expenses, childcare costs, and healthcare expenses, each inflating at different rates.
Through a powerful real-world example, Sean shares how a 40-year-old doctor diagnosed with stage four cancer was able to capitalize 25 years of future income rather than receiving monthly payments until his death four years later. This claim-stage flexibility represents a fundamental shift in how insurance can work when you need it most.
Perhaps most revolutionary is BrightRock's concept of your premium as an asset. Unlike traditional policies where premiums simply disappear when coverage ends, BrightRock allows you to convert that premium value to other forms of coverage as your needs change—without medical underwriting. This becomes increasingly valuable as you age and developing health conditions might otherwise make obtaining new coverage impossible.
Sean challenges listeners with a sobering reality check: if you earn R1 million annually with 25 working years ahead, you need R25 million in life cover to truly replace that income—not the R5 million many might have. Are you actually worth more dead than alive, or are you severely underinsured? Listen now to discover how needs-matched insurance can transform your financial protection.
Please subscribe to our podcast or have a look at our website
www.growthfp.co.za
Hello everybody. Welcome to Know Your Money. I am Bronwyn Wayner.
SPEAKER_04:And I'm Craig Finch, and we are from Growth Financial Planning. We hope you enjoy our podcast.
SPEAKER_03:Hello, everybody. We have Sean Handon back from BrightRock, who's the executive director of BrightRock. Sean, thank you so much for being here again today. What we thought to maybe kind of unpack a little bit is in our previous episode with you, you described how Brightrock is doing things differently. So first of all, I just want to kind of explain for the listeners. So you can have life cover, which is a whole of life generally in the industry. So you have that cover. You take out the million rand and you'll have that cover for life. Anytime you pass away, that would pass.
SPEAKER_04:Doesn't matter how old you are.
SPEAKER_03:Yes.
SPEAKER_04:Correct.
SPEAKER_03:What BrightRock has done differently is sort of do needs-based. So sometimes you'll have four million rand life cover for whole of life, but actually you only want to ensure that for 20 years because two of that four million is for your bond. So Brightrock gives you those options under your life cover to break up the different types. Then there's obviously disability cover, so that would be covering you if you became disabled until retirement age. And severe illness, they do offer like till the age of 65. When we do it at our growth financial planning, we only ever do whole of life because you don't want to be insured for severe illness till the age of 65, and then at 70, the can't be able to do that. So I think Sean, if you can maybe just explain the difference, because as mentioned, what happens with BrightRock is your premium goes up, but your cover goes down in certain instances. So depending on which one you select, but that is sort of for a reason. So if you're gonna have bond cover, your bond isn't gonna go up, it's gonna go down, but the premium goes up. Do you want to maybe unpack that a bit?
SPEAKER_00:So so uh very often we hear competitors talk about the fact that BrightRock is a term cover product and a depreciating term cover. In other words, my cover is coming down. That's uh unfortunately uh not an accurate description or uh it's quite ignorant in terms of understanding needs match technology. And term means it'll stop, which is also not true. It won't stop. And that is why that is why we are the only company in the country today that can tell you next year if your cover goes up, what your what what percentage your or your premiums will go up by. You've got to ask the question why can't I get um a CPI increase on my premium and a CPI increase on my cover with any other carrier? You can get one or the other. Okay, why? You know, so we question that. So one of the biggest things that I I will say to you that for us is is is a massive, massive issue is the issue of protecting income. So if you think about it right, and I'm not a financial planner, okay, as I explained in the previous series, I did my RE exam twice. But um the the the reality is is uh for the average South African or the average person, being able to protect an income or to provide income over a premium over their lifetime is the biggest single asset, okay, in a family. Now income protection is grossly undersold. 100% because most sales go, how much can you afford? There's a chunk of life cover, okay? Instead of actually understanding the needs. So the very first thing you'll see on our product grid, okay, is household expenses, income protection. Okay. And we we split our income protection up between household expenses, in other words, your living costs, your child care costs, okay, and your health care costs. Why? Because if you want to protect and accurately protect those needs, they're inflating at different rates. So when I drive past my children's school, it starts to suck my product in, okay, because my private school fees are not enough. Okay, but they're inflating at 10% per annum. Okay, my medical aid is inflating at at more than 10% on average. Okay, CPI is going up at whatever, 5%. Okay. So in order to protect those income-generating um needs, we split that up. And then what we did was we said, what happens in the traditional income protection policy today, today, as we sit here, okay, if I get diagnosed, okay, with as we've just paid a claim for a doctor in Kriegersdorp, okay, if I get diagnosed with with cancer as an example, I mean, prognostically, okay, I mean, and statistically, my longevity is going to be shortened. And so what happens if I have an income protection policy? It pays me out from day seven, okay, seven-day waiting period, and it stops the data. And we said, why? Yeah, why can't I, when I know what's wrong with me, capitalise all my future income amounts? So when you say that that cover's coming down, it's not the cover coming down, that's the number of paychecks that you are protecting that is reducing as you get closer to your retirement age. So we are the only company that has the ability, okay, at claim stage, to give you claim stage choice of taking the income amount or taking or capitalizing all your future income amounts and taking it as a cash. We can explain that in idiot terms. So let's say you've got 10 years less. Well, explain that, doctor, that's of your working career. Yeah. How does that work? Okay, so let's let's if you don't mind one, I'll explain the doctor. So the doctor's diagnosed with uh lymphatic cancer. How old is he? He's 40. Okay. Diagnosed with lymphatic cancer, okay. He was going to work till 65. Okay?
SPEAKER_03:He can no longer work at all now.
SPEAKER_00:Okay. He he might even be able to work. He might be able to but he's but he's got confirmed stage four lymphatic cancer. So as a doctor, he knows that that that his longevity is going to be affected. In this case, it did. He died four years later. Okay. He was able to take 25 years worth of income and capitalize at that claim stage, which you cannot get in.
SPEAKER_03:So what that means is But let me just explain it a little bit further. So in most of the other insurance companies, he's been diagnosed with that stage four and he's insured for 60,000 Rand a month. He will get 60,000 Rand a month every single month for four years. What BrightRock offers is you've been diagnosed with that. That 60 till the age of 65 would have actually been six million Rand. That client can choose to I know I'm just explaining I'm not explaining to you, I'm explaining to the listeners. Um that client can take the 60,000 Rand, uh the six million Rand and take that now instead of taking the 60s paychecks.
SPEAKER_00:And that's very important, Bonham, because because by accurately mapping the protection of your paychecks, okay? So in this case it's 25 years worth of earnings. Okay. And and and by accurately mapping them, okay, so in other words, in your last year, you've got one year's worth of paychecks to protect. That's where the competitors are saying the depreciating cover comes in, okay? But that's nonsense. Okay, you're accurately check uh uh protecting the actual paychecks. Now, by by by shaping it like that, you're able to give people a hang of a lot more cover when they 40 than they could traditionally buy with a normal product, okay, that is a whole of life policy. Okay. Now, importantly, let's say I get to a point where I've outlived my need to protect my income. But bearing in mind that my premiums have gone up at a fixed percentage, okay? Even if they increase about 20% every 10 years, okay, at the end of the day, that premium is predictable. And that premium is an asset, okay, which no other company can sell. Now, that asset, okay, if I have it, even if I've, and by the way, we've got income protection on death, okay. Why did we not sell income protection on death? Surely we should protect the family's income when the income owner's dead. Okay. No one does that. Okay, we do it. And even if you've claimed, okay, on the policy, on our death column, that premium you can convert to whole of life cover when you no longer need to protect your your your income. And that's the flexibility I spoke about in the previous session when I spoke about our three pillars of efficiency, certainty, and flexibility. You know, so when people say your premium's going up, but your cover's coming down, they're grossly misleading and not understanding the technology.
SPEAKER_03:And what they must see is that exactly like you described it as an asset. Yes, your premium's going up, but you almost want it to go up a little bit because at that stage when you're now not protecting your salary, okay, you're going to need more severe illness cover, for example. So you can now take that premium that was going towards income protection, whereas at other places it would fall away, and now you can buy up a million rands worth of severe illness cover, which is the need you actually need at that time.
SPEAKER_00:Correct. And and a lot of people will tell you, sorry, Bronan, you call I'm interrupting you, but you're quite right. You know, at the end of the day, a lot of people will say to you, but I pay the them uh premium rate. Okay, but your premium is predictable. Okay, so the PV of your premium, your present value is constant. You know, and and people don't understand that. You know, because uh yes, life c life rates increase all the time. They have to. I mean you get and also I mean the you know you have an expensive like COVID, you know, p people will increase their premium.
SPEAKER_03:And is that free of underwriting at that stage? So that's that's massive as well. So if you have that income protection payment and then now you need it to move it into severe illness cover, if you try to go get severe illness cover somewhere else, you might have diabetes or anything like that. You can't get the cover.
SPEAKER_00:And that and that free of medical underwriting, okay? Obviously, financial underwriting, we can't uh overinsure people, it's against the long-term insurance act. But you know, it at the end of the day, that premium asset is so so valuable, as I explained last time. You know, I've seen it with my own policy. You know, I moved my my oldest son to turn 24, I moved that premium. You know, and and you talk about additional expenses, we we don't call it dread disease, we call it additional expenses needs. Because you don't know what pool of money you'll need when you get sick. Okay. Um most of the time, if you ask people, have you got dread disease? Yes, how much? Yeah? They don't know. Okay, and is it enough? Exactly. I often say to people, I I I mean, uh we don't get invited to bras anymore. I'm just I'm just gonna tell you.
unknown:Okay.
SPEAKER_00:So it's like not fit for sort of a lot of people. I live there too, don't I? We've got to the dam. But um but at the end of the day, you you sit at the br at a bra and people, what do you do? Uh also pinworking asked. I said, I saw life cover, eh? Yeah. And then at that stage, the brand new cokes disappear. But but the reality is I say to people, you've got a life cover. And they go, yeah, yeah, yeah, I'm gonna. How much? Uh uh I don't know. But I'm worth more dead than alive, most people will tell you. Okay, but the point is you say, okay, well, you've got five million life cover. Yeah, how much do you earn? 100,000 Rand a month or a million a year. What's five million gonna buy you? Yeah, you're not worth more. Okay. Yeah, if how many years are you gonna work for your foot? You're gonna work to age 65. That's 25 years. You're earning a million Rand a year, you need 25 million today, bud, if something happens to you. Yeah, okay. But because I I haven't been I my need has not been exposed. Okay, I've just bought a chunk of life cover. You know, it's amorphous. So yeah.
SPEAKER_02:Awesome, thanks. Do you have any questions on any of that, Warren?
SPEAKER_04:No, it's very nicely explained. Sure, and thanks for that. Thanks so much, thanks. Appreciate it. Thank you for listening. If you have enjoyed this podcast or would like to subscribe, please visit our website www.growthfp.co.za. 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.