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Get up close and personal with your group insurance benefits

09 March 2021 Momentum Corporate

Changes to the Policy Protection Rules will help

Have you ever underestimated someone simply because you didn’t really know them? This is also true when it comes to financial benefits, particularly those we access through our employer, like group insurance.

Rudi van Rooyen, Head of Group Insurance at Momentum Corporate, says, “Unfortunately many employees do not fully understand or appreciate the insurance benefits they have through their employer; although the current pandemic is certainly reminding all of us how important it is to have financial certainty in the event of the unexpected, like disability, critical illness or death.”

There are good reasons why our relationship with group insurance benefits tends to be at an arm’s-length. Van Rooyen explains, “Firstly, decisions around the provision of group benefits usually lie with the employer rather than individual employees. Furthermore, communication around group benefits is often cluttered with confusing language and industry jargon. Finally, it’s human nature to shy away from thinking about how unpredictable and uncontrollable life can be.”

“However, inadequate knowledge and poor engagement around your group benefits can mean missing out on important benefits when you and your family need them most. It can also result in you having too little overall insurance by being under-insured, or having too much by being over-insured.
And, where an insurer includes value-added benefits alongside the insurance benefits, low awareness may mean missing out on this additional value,” says van Rooyen.

Fortunately, changes to the Policyholder Protection Rules (PPRs) under the Long-term Insurance Act are going to help you to get a lot closer to your group insurance benefits.

Van Rooyen explains, “Treating members of group insurance schemes or retirement funds more fairly is at the heart of these rule changes. A key change is that the definition of a policyholder in a group insurance scheme has been extended from just the employer or retirement fund to include all individual members. This means the law now requires insurers of group policies to communicate directly with you, providing specific and appropriate information on your benefits and the policy.”

“Direct communication from the insurer will help you to become more familiar with your benefits and the conditions under which they are paid. If your retirement fund or a group insurance scheme offers flexibility in choosing insurance benefit levels, you will become more aware of this feature and be able to increase or reduce your benefit levels according to your personal situation. This helps you choose the benefit levels best suited to your personal situation,” says van Rooyen, adding that if the insurer offers value-added benefits, you will be better informed on the value these additional benefits offer.

The law also says that the communication used by the insurer to explain benefits, features and conditions for payment must be in plain language, through an appropriate medium and should not be misleading. So the communication you receive should be easy to understand and help you to make informed decisions.

In order to communicate with you, the insurer providing the group benefits needs to have up-to-date contact information about you. At the very least, they need your names, identity numbers and contact information, such as a mobile number or email address. This is why insurers are working with your employer, retirement fund and your company’s employee benefits financial adviser to collect up-to-date information so they can communicate with you, as required by the law.

Van Rooyen assures members that this information will only be used for the purpose of communicating around your group insurance benefits and there will always be strict compliance to the provisions of the Protection of Personal Information Act (POPIA).

In closing, van Rooyen says, “If you are fortunate enough to have group insurance benefits through your employer, invest time and effort in understanding them. Talk to the benefit specialists or human resources personnel at your company, or to the financial adviser for group benefits that your company has appointed.”

Quick Polls

QUESTION

Financial behaviour experts suggest that today’s risk modelling methodologies ignore your client’s emotional ability / behavioural capacity. What are your thoughts on spicing up risk profiling tools to make allowance for your client’s financial behaviours

ANSWER

[a] Bring it on; my client’s make too many irrational financial decisions
[b] Existing risk profiling tools are adequate
[c] Risk profiling tools should be based on the model / rational client
[d] The perfect risk profiling tool is science fiction
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