159. Securing Your Child's Future: BrightRock's Innovative Child Care Benefit

What happens to your children's education if you're no longer able to provide for them? Sean Hanlon, Executive Director of BrightRock, returns to Know Your Money to tackle this critical question with hosts Bronwyn Waner and Craig Finch.
 
 The conversation delves into BrightRock's unique Child Care Benefit, challenging conventional thinking about educational protection. Rather than offering a traditional lump sum payment that statistics show disappears within just 36 months on average, BrightRock provides an annuitized income that continues until a child reaches age 24. What makes this approach revolutionary is that it's not contingent on school attendance, allowing families flexibility if circumstances change after a parent's death or disability.
 
 Hanlon shares personal insights as a father of four, explaining how he structured his own family's protection through a trust that owns his policy. This arrangement ensures each child receives a guaranteed monthly amount with specific conditions attached. The benefit also addresses the reality of educational inflation, with some private schools increasing fees by approximately 12.5% annually – far outpacing standard inflation indexes.
 
 At its core, the Child Care Benefit represents a philosophical shift in how we think about protecting our children's futures. As Hanlon poignantly observes, "What does money really give you? It gives you choice." By focusing on preserving choices rather than simply covering educational expenses, BrightRock's approach offers a more comprehensive safety net for families facing life's uncertainties.
 
 Want to learn more about innovative financial protection strategies for your family? Subscribe to Know Your Money through our website at www.growthfp.co.za and join the conversation about securing your children's financial future.

Chapters

• 0:12 Welcome to Know Your Money
• 0:29 BrightRock's Child Care Benefit Explained
• 1:59 Income Protection vs Lump Sum Payments
• 3:08 Setting Up Trust Fund Protection
• 4:10 Protecting Children's Choices, Not Just Education
• 7:30 Podcast Closing Disclaimer

Transcript

SPEAKER_01: 0:12

Hello everybody. Welcome to Know Your Money. I'm Branwan Wayner.

SPEAKER_00: 0:16

And I'm Craig Finch, and we are from Growth Financial Planning. We hope you enjoy our podcast. Welcome everybody. Sean Hanlin, Executive Director from BrightRock, once again in the studio. Thank you so much for joining us. Thank you, Craig. Now you mentioned in previous podcasts you've got four children. And all of us around this room have got children and we need to educate them. And I believe BrightRock's got some unique features around education. Why don't you share them with us today, please?

SPEAKER_02: 0:43

Yes, thanks, Craig. And thanks again for having me on. I, you know, one of as I've mentioned, I think in previous podcasts, you know, under our income protection, we've got uh child care benefit, you know. So um it's it's uh we haven't called it uh education protector because it doesn't necessarily fire when you need to protect education. So that's why we called it child care benefit. So if you look at a lot of education benefits available in the marketplace, you know, they're contingent on a child being at school, okay, and a child might not be at school. Um, you know, in a lot of instances, a child whose parent dies might move from Johannesburg, where they're in a school, okay, to a rural area, okay. Um and and and a lot of the benefits won't then pay um or continue paying that amount of money. So that is why we and I'm grateful for you asking the question, because again, when we did the the RD and the product product design, we looked at educational benefits in the marketplace and decided not to call our product an education benefit. It's an income protection product, okay, so it pays out an annuitized income because we don't want people to get paid a lump sum because there's no guarantee that that annuity will, that income amount will get to that child. Um so it pays out as a you know on a nominated amount. Um it also can increase at a at a different in uh in uh inflationary rate, because you know, I don't want to mention the school that my children are in, because as I've mentioned in previous costs, um, you know, when I drive past it, it starts to suck my my vehicle in because it just consumes. Okay, and uh and if I just look at the the educational costs of my children, and uh and unfortunately for us, uh you know, I have to send my children to a private school. We don't, you know, we don't have a facility available to us as there are in other parts of the country. Um and and I'm glad I do because you know the school is progressive, you know, it's it's it's forward thinking, you know, it's embracing of the of the change in the environment. And I would hate to think that if something happened to me that my children would be would be depri deprived of that, you know. Um but if they uh end up you know not going to university as an example, so you know, because we we all want our children to go to university. But you know, if you're like me, school school was for other people there, you know. Um but the reality is that I might not, my child might not go to school, you know, but if I I'll still continue getting that child will still continue getting paid out that annuity amount until he or she reaches age 24.

unknown: 3:23

Okay.

SPEAKER_02: 3:24

And it pays to the uh the parent. If the child is underaged, yes. Or and in my instance, what I did is I took out um income on death, and we've discussed this before in in previous sessions. Um I've never understood why life insurance policies do not pay an income on death. Okay. Instead of a lump sum. Instead of a lump sum. I mean uh it's it's uh from the time a person uh I think it was a Swiss resurvey I was watching, we were looking at the other day. From the time a person gets paid out a lump sum of cash to the time that that money's gone is 36 months on average. You know, and you tend to then find that people have spent that money on on on on the lifestyle stuff. You know, instead of on on other family members as well. Exactly. You know, and uh and yeah, I know it's it's like I think we discussed offline now. You know, I've never understood why the lotter pays out you know a lump sum, it should pay out an annuity amount, you know. Um because it it really can be destructive. So so that's those are sort of the the the sort of core um thinkings behind why we we brought out child care benefit.

SPEAKER_00: 4:26

And do you nominate an amount or do you uh do you do you give guidelines on that as well?

SPEAKER_02: 4:30

No, no. What I did is I took out uh income amount, okay, on my death. Uh the trust owns that policy. Uh so I'm guaranteed that those children will get, let's say, 5,000 rand each, okay, paid to that trust. And then obviously the terms and conditions are embedded in my will and in the trust, and then it pays uh out on those terms and conditions to the children. But there's a guaranteed income amount paying to that trust, you know. Um and and again, as I said before, and and not a lump sum, you know. So I took out in my personal capacity, for my disability, I took it out of my personal capacity, because then I've got my claim states choice, which we've discussed you know in previous uh sessions. Um, my bond gets paid off, um, and uh and yeah, so that's how that's how I've structured my my deal.

SPEAKER_01: 5:14

And then does that cover just cover school fees or does it cover more than that? Like how does the child care, what can you cover in that?

SPEAKER_02: 5:22

Okay, so so so Bronan, that's a that's core to to to to to the to the design. Is it is it's it's not contingent on school fees. You know, it's it pays out, and like I said, in my instance, okay, I've got a trust that owns this policy, and it pays out based on certain conditions that I've put into the trust. You know, uh so uh you know, I mean, I don't know what those are, like I'm like they can't take drugs, you know, a lot.

SPEAKER_00: 5:49

Yeah, but but the but the reality is that this But you don't need a trust when you do trust. You don't need a trust.

SPEAKER_02: 5:56

But it so let's say I say I want 5,000 per child, okay, um it will pay out all four of them 5,000 rand a month.

SPEAKER_00: 6:04

Escalating as well. Escalating as well.

SPEAKER_02: 6:06

Escalating again at at at you can choose. It's not it's not just CPI.

SPEAKER_00: 6:10

Okay.

SPEAKER_02: 6:10

Because in in their instances, their school fees are going up by around about 12.5%.

SPEAKER_00: 6:14

So if one of your child kids get a boost for you or that, you then you're not aligned. Yeah, carries on paying. It's not contingent. Okay, okay.

SPEAKER_02: 6:24

And your life insurance policies are going up on average by 12.5%. If you look at the News 24 survey, it's wild. Oh, yeah.

SPEAKER_01: 6:30

Awesome. Anything else around the education protector that you think is worth mentioning?

SPEAKER_02: 6:35

I think uh you know I mean not education protector, sorry. If if I look back, uh you know, one of the greatest ways you can save money is not to have children. Yeah. Um however, they do bring a tremendous amount at least. A little bit of joy uh at times. Uh I I won't tell them that. Uh don't worry. I call them I call them consumers.

SPEAKER_00: 6:56

But if you do have children, that's and something does happen, that is a reality that they the extra money needed for schooling. It's a it's a real reality.

SPEAKER_02: 7:05

Yeah, Craig, we've discussed it um before. You know, um if you think about what does money really give you, you know, it just gives you choice there. Yeah. So without that money, you you you that choice is removed. Yeah, correct. You know, and that's why we and and I'm glad you've asked the question, that's why we didn't call it education protector. Yeah. Because it's much more than just protecting a child's education, it's protecting their choices.

SPEAKER_01: 7:25

Very good. Awesome. Thank you so much for that.

SPEAKER_02: 7:28

Thanks for that, thanks very much, guys.

SPEAKER_00: 7:30

Thank you for listening. If you have enjoyed this podcast and 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.