Holistic Disability Specialists

Your client’s greatest asset is the ability to work and earn an income. The importance of protecting this asset against illness, injury or disablement, which could render the client unable to work, cannot be overstated.

At FMI we are constantly looking at evolving the product solutions that we offer. We have enough experience to understand that a disability can have severe financial consequences – immediate and ongoing, both of which need to be catered for under a single yet flexible product. FMI have recently incorporated a Capital Disability benefit into the Business Person Elect (BPE) Product in response to this need.

• Capital Disability products provide a lump sum benefit in the event of permanent disability. This can be used to repay debt and provide for the immediate needs associated with such a disability.

• Income protection provides a monthly payout for future living expenses, should the client become incapacitated and unable to work

• Income Protection covers both Temporary and Permanent disability.

• Temporary disability events are far more common. In 2010, 81% of claims made against FMI’s Temporary Income Protector (TIP) product were temporary disability events, lasting an average of 79 days and therefore less than 3 months. These claims would typically not qualify for any Capital Disability payment where a waiting period of 3 to 6 months applies and permanence is a claim criterion.

• Multiple claims can be made on Temporary Income Protection.

The addition of the Capital Disability benefit to our product range will provide our customers and intermediaries with a single product solution that enables holistic income and lump sum disability planning and leverages off FMI’s long-term experience in disability underwriting and claim assessment.

The combination of Capital Disability benefits with FMI’s market leading income protection solutions will materially reduce the benefit interaction, aggregation and claim assessment risks which customers and intermediaries face when a disability insurance portfolio is constructed across multiple products.

Both the Capital Disability Benefit and Income Protector serve a valid purpose and cover different needs. A mix of both benefits is ideal as Capital Disability takes care of immediate needs, while Income Protection offers peace of mind into the future.

With the addition of Capital Disability Benefit to our product platform, your clients will be able to obtain 100% income cover under the PIP benefit, while also enjoying the option to take out two times annual salary on the Capital Disability benefit. In essence the same client can enjoy more cover under a single BPE policy.

It is important to note that your clients can take advantage of our generous aggregation rules and unique ancillary benefits to maximise the payout that they would receive when they need it most.

Practical Example:

Jack Aged 50

Earning R50 000 per month

Cessation Age of 70

Jack applies for the following cover:

• TIP R50 000 per month
• TIP Dread Disease Enhancer R10 000 per month (cover fixed at 20% of TIP cover)
• TIP Hospitalisation Enhancer R10 000 per month (cover fixed at 20% of TIP cover)
• PIP R50 000 per month
• Capital Disability R1.2 million

Let’s consider two possible claim cases:

EXAMPLE 1: Jack could be hospitalised for a period of 6 months as a result of organ failure.  Because this is a dread disease and Jack is in hospital for 6 months, he will be paid R70 000 under his TIP, TIP Dread Disease Enhancer and TIP Hospitalisation Enhancer benefits. This claim amount represents 140% of what Jack was actually earning.

EXAMPLE 2: Jack is permanently disabled. Over and above his TIP claim payout, he will receive R50 000 per month until age 70 or death, which represents 100% of his earnings. In addition to this he will receive a lump sum of R1.2 million under the Capital Disability benefit. At application stage there is also the option to attach a claim escalation percentage to his PIP benefit so that his PIP claim payout would increase every year on claim anniversary. Note that the Capital Disability cover does not taper as the Life Insured approaches cessation age.

For the above example, If Jack had elected to take no PIP cover he could have selected Capital Disability cover up to R7.5 million.