Even experienced financial planners occasionally forget
Financial planning, including wills and estate planning, are an integral part of building financial resilience across female society. This sentiment emerged during a recent Discovery Life Women’s Month Virtual Media Roundtable, during which the insurer drew attention to the role that South Africa’s financial planning community plays in creating financial plans that protect clients and clients’ families from death and disability events.
On cancer, disability and unpaid work
The presentation kicked-off with a no-nonsense overview of the global risk environment from a woman’s perspective. Under illness, the life insurer observed that 9.2 million women were diagnosed with cancer each year, with around 4.4 million women passing away as a result of the disease. They illustrated the skew between men and women suffering from disability, noting that women with disabilities were two times less likely than men to find employment. And they reminded the journalists in attendance that around 76% of the total hours of unpaid work, such as child minding and housework, were performed by women. These trends exhibit in South Africa too.
“Women [tend to] earn less than their male counterparts, and almost 43% of South African households are headed by single mothers,” said Kashmeera Kanji, Head of Market Analytics and R&D at Discovery Life. The combination of lower salaries and single breadwinners providing for households’ financial needs introduces challenges for women, not least of which saving for retirement. “The retirement conundrum is more difficult for women,” said Gareth Friedlander, Deputy CEO at Discovery Life. “They are [often] earning less; doing a lot more unpaid work; and living longer”. He added that women, and the financial planners assisting them, had to consider multiple scenarios that compounded an already complex financial planning environment.
In this context, women need to be more deliberate about the various ‘what if’ death and disability scenarios they face. Harry Joffe, Head of Legal Services at the insurer said the number of female-headed families in South Africa was cause for concern. “It is a scary statistic when you consider the legal consequences,” he said, before posing a couple of rhetorical questions. Have these single moms got wills in place? And have they made legal arrangements for the care of their minor children if they pass? Joffe encouraged financial planners to consider the wills and trusts requirement of all women, whether single, married or cohabiting with a partner.
A financial planning misstep to avoid
It turns out that even experienced financial planners occasionally forget about the estate planning needs of the partners or spouses of their primary clients. Joffe illustrated this frequent estate and financial planning misstep by sharing a ‘real life’ example. To paraphrase: we were meeting with a high-net-worth male client, the director of a listed company, to put his will in place and take care of some of the related financial planning. It was only later that we picked up that he was married in community of property, meaning that his wife owned half of his shares. Surprisingly, no one had thought of doing a will for her.
Claire Van Wyk, a Registered Financial Planner and FSA™?, advocated for a hands-on approach to uncertain death and disability events. She suggests that all her clients have a ‘what if’ folder to help them to visualise these events and their likely consequences, and to ensure that a plan exists to respond to legal and financial challenges that arise from them. The files are built around questions like: What if the client gets sick? What if the client gets disabled? What if the client dies? “Women need to have measures in place to protect themselves and their families financially, and [should consider drawing up] a ‘how to’ manual to tell everyone [else in the household] what to do if something goes wrong,” she said.
Kanji commented that financial planning was not something that happened at a certain age, or when you have children, or when you get married, or when you buy a house. It is a continuous process aimed at ensuring clients are capable of responding to trending risks. In fact, Discovery Life’s claims statistics support the need for women to have adaptable, flexible financial plans in place, starting as early as possible. “You are never too young to draw up your will or start your financial planning journey, because you are never sure at what stage a death or disability event is going to affect you ,” agreed Joffe.
Cancer features in staggering claim statistics
The insurer offered some recent life insurance claim statistics to illustrate the current risks facing women. “Cancer is the leading cause of female disability and a leading cause of illness for both men and women,” Kanji said. Even so, women age-30 and under are 1.6 times more likely than men in the same age group to claim for cancer. Turning to critical illness, the insurer revealed that 42% of income protection claims by women aged between 31 and 40 years were due to cancer … and that 44% of all income protection claims in the 41-50 age group were for females. The wake-up-call: to live out the rest of your life with a disability with no income has dire consequences.
Dr Maritha Van Der Walt, Chief Medical Officer at Discovery Life was on hand to unpack the cancer scourge in greater detail. “Women are being diagnosed with cancer at younger ages, perhaps because there are better screening programmes and there is greater awareness,” she said. The trend was positive given that the cure and remission rate for early stage or in-situ cancers are way higher than for diagnoses at later stages. The doctor offered some blanket advice for both cancer and mental health perils, urging advisers and their clients to do the recommended screenings, stay active and healthy to prevent disease; and have the necessary insurance cover to replace income or to compensate for a disability.
Females were 1.8 times more likely to claim for mental health under Discovery’s income benefit plans than men, though men were more than twice as likely to commit suicide. “We are definitely seeing higher mental and behavioural claims in the earlier stages for females, which might have something to do with the burden they are carrying,” said Friedlander. The focus on death and disability claim statistics led to a discussion about holistic family coverage as a key part of financial planning, which quickly segued into the important ‘will and estate planning for women’ topic.
Ensuring holistic family coverage
You cannot write a policy for the man to cover his part of the estate duty without thinking about insuring his wife to cover her side of the duty, to ensure her estate liquidity, Joffe explained. He could not resist sharing some of the insurer’s innovation in this space, with Discovery’s last survivor benefit designed to cover both spouses on one product.
The main thrust of Joffe’s contribution was, however, aimed at ensuring that women address their estate planning needs. First off, he warned against the myth that single women without children did not need a will. “A lot of women, even if they do not have children, are looking after siblings or aged parents,” Joffe said. Then, revisiting the 43% ‘single mom’ household statistic, he stressed the importance of appointing a guardian, and establishing a trust for minor children. “You cannot be a single mom and not think about what happens if you die; you need a trust, a will, and probably some kind of estate or education protection too,” he said.
The estate planning aspect was further unpacked in the context of dying without a will and / or appointing a guardian for minor children. In such cases, a woman’s estate is distributed per the Intestate Succession Act of 1987 while the courts would usually confirm the father as the minor children’s guardian. PS, there are countless complications that arise from dying without a will … a stand-out example being the ‘sharing’ of fixed assets between minor children and adults.
Writer’s thoughts:
The legacy of the traditional family unit led by a male primary breadwinner has proven hard to shake. Yes, progress has been made, but there are still many imbalances to address. Do you think South African financial planners pay enough attention to women, especially when dealing with a husband or male breadwinner as their primary client? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za
