Trusted advisers are worth their weight in gold
Important goals that we previously considered vital to enjoy a comfortable retirement have changed dramatically over the last couple of decades.
“Settling the debt on the house and other assets, for example, as well as ensuring that our estimated retirement savings was on par, pretty much covered the retirement goals,” said George Kolbe, Head of Marketing for Retail Life Insurance at Momentum.
“However, with a definite upward trend that has emerged where people are living much longer, compared to a few decades ago, the number of variables that can derail a comfortable retirement has multiplied. In fact, according to the 2011 Census report, 2 797 citizens were over the age of 110 and 15 581 people were over the age of 100 years, citing that longevity is alive and well, even in South Africa,” continued Kolbe.
“Also, according to the World Health Organisation (WHO), the global population, aged 85 years-and-older, is projected to increase 351 per cent between 2010 and 2050 and the population aged 65 years-and-older is expected to increase 188 per cent during the same period. These alarming increases allow for the global number of centenarians to rise ten-fold between 2010 and 2050,” added Kolbe.
Adding to this, Kolbe said, is the prevalence of critical illnesses like cancers and other diseases as a result of our aging population and our lifestyle choices. This is also highlighted in our 2019 claim statistics with cancer accounting for 41% of all critical illness claims. “Hence, the occurrence of cancer is expected to accelerate vastly over the next few decades. The annual number of new cases is projected to rise globally and reach a frightening 27 million by 2030,” he said.
Longevity and multi-benefit packages
Dr Dominique Stott, Liberty's Chief Medical Officer said, "Cancer remains the highest cause of claims related to critical illness, death and disability. The reality of a cancer diagnosis is that the treatment and recovery after a diagnosis can take many years. We're seeing more cases where the patient doesn’t die from cancer - chances are they'll contract another condition that requires further medical care. This results in a significant financial impact on households in terms of family lifestyle, work and the ability to earn an income."
“Prostate cancer is the most prominent claim cause for men at 32.3% while breast cancer makes up nearly 50% of cancer claims for women. Colon and rectal cancer are the second most common cancer claims in men and women, 14.3% and 7.5% respectively,” added Johan Minnie, Managing Executive of Customer & Adviser Experience at Liberty.
As a result of this emerging trend in survival, Minnie said long term insurers and financial advisers should consider a good balance of lifestyle protection cover; and not just death insurance. Even though cancer remains the highest cause of claims, statistics are showing that people are living longer.
"Traditionally, life insurance has been more appropriately described as death insurance because the policy pays money to beneficiaries at the policyholder's death. However, advances in medical technology and early diagnosis of critical illness are seeing more people recovering from adverse events. Now claimants and their beneficiaries need to manage the cost of survival and it was time that the industry changes the conversation," said Minnie.
Although the above-mentioned statistics can create a lot of anxiety, Kolbe mentions that there are pockets of excellence in the insurance- and related industries that can address these concerns and changing client needs in an innovative manner.
Likely to impact the industry
“Technology, on a global scale, is altering the game, not only in the insurance industry but also in numerous other industries. This has also led to a number of advances on the medical front which resulted in extending clients’ lives even if they suffer from a critical illness like cancer. Diseases that were previously viewed as ‘life threatening’ can now be ‘managed’ and even cured,” said Kolbe.
“Also, media reports tell us that people, in general, are living much longer than before and with the medical advances in play, this implies that clients might be living longer but not necessarily healthier lives. Factors like these will have an enormous impact on the long-term insurance industry when it comes to benefit design and client needs, especially when one considers that medical advances are moving to bespoke, personalised treatments for a number of diseases. This is why having access to comprehensive critical illness cover and longevity protection that specifically view longevity as an insurance risk, has never been more important,” emphasised Kolbe.
“Also, we have seen that illnesses linked to mental health are on the increase and this is a global phenomenon, for the most part due to increased work pressures/stress and our very demanding lifestyles. We expect this to become more prominent in the claim space, going forward,” he said.
“Furthermore, a shift is expected in the health and wellness environment with massive developments in the use of wearables. Insurers will probably rely on technology more and more by using wearables and other engagement platforms to actually prevent death, disability and critical illness events with the aim to detect diseases earlier and reduce claims,” continued Kolbe.
The financial planning process
“The combination of a rise in life expectancy and the advances in medical technology means longevity is becoming a crucial factor to consider in the financial planning process with clients. This is because living longer does not necessarily mean living healthy and the burden includes providing for more years in retirement and for extra medical expenses,” said Kolbe.
Minnie concluded, “Putting the clients’ needs first should be the top priority for financial advisers. Clients need to know that their financial advisers are qualified, professional and experienced enough to give them appropriate advice. This is the foundation on which long term relationships between advisers and their clients can be built.”
“Nowadays, clients expect more personalised communication through the various channels and devices that they use, and companies that do not keep up with this shift, might lose their clients. This is where an Omni-channel, or universal, interaction approach can orchestrate the client experience across all channels so that it is seamless, integrated, and consistent. This will also have a direct impact on the way financial advisers engage with their clients. Omni-channels anticipate that clients may start in one channel, e.g. dealing with a financial adviser initially to identify risks and get expert advice on solutions and move to another, e.g. increasing their benefit limits online or via an electronic special offer, as they progress to fulfil a specific need,” continued Kolbe.
“However, in spite of all the technological advances, it is important to always remember that we are in the “people business” where unique client requirements trump any form of generic or standardised product design. This is because financial advice is different for every client; hence a trusted adviser is worth their weight in gold. Also, technology in its current form, cannot interpret client needs to the level where unique client needs match unique client experiences. This is only possible through active engagement with clients. This is why it is important to acknowledge that, no matter how much we rely on technology as an enabler, trusted financial advisers will always play a central role when it comes to helping clients achieving their desired levels of financial wellness,” concluded Kolbe.
Writer’s Thoughts:
As highlighted above, clients might be living longer but not necessarily healthier lives. Factors like these will have an enormous impact on the long term insurance industry when it comes to benefit design and client needs. Do you believe critical illness cover and longevity protection are now more important than ever? If you have any questions please comment below, interact with us on Twitter at @fanews_online or email me - myra@fanews.co.za.
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