MORE ON LONGEVITY COVER


Investing & Money
piece written on the 6th October 2015 by  

Last week I chatted to you all about longevity, how people are living longer and how that potentially effects us in terms of preserving our wealth and cover in the long run. To summarise, people these days are living longer than ever before and because of this we have to account for additional costs simply because there are more years to deal with and people are effectively outliving their capital. This is a reality and one that needs to be addressed, without making provision for the additional years that we’re alive, we’re going to fall short and struggle right at the end.

Finally, last week I introduced you to Momentum’s longevity benefit which provides you with additional pay-outs, on top of critical illness, for the rest of your life. Furthermore, the benefit allows you to receive up to 50% extra disability cover should you become disabled. Finally, if you’ve never claimed by the age of 80, Momentum pays out a lump sum that may supplement your retirement income in the long-run.

To best explain all of this we should look at an example, so that’s exactly what I’m going to share:

Mark is a 25 year old, non-smoking male. He submitted a claim and received a lump sum payment of R2,000,000 under his disability and critical illness benefit as well as a R50,000 income protection pay-out per month. He linked Momentum’s longevity benefit to all of these benefits, the potential pay-out levels, at various age milestones are significant. The longevity benefit pay-outs started 5 years after Mark’s qualifying claim event. The cumulative pay-out at age 55 and therefore is seen as follows:

longevity-claim

If Mark satisfies the claim criteria in year one, the table above shows the estimated longevity pay-outs that he will receive. Pay-outs will be made for Longevity Protector – Critical Illness for as long as MarkĀ is alive and the final longevity protector pay-out will be made on or before benefit expiry for the other longevity protectors.

This approach of regular pay-outs throughout life after a claim (or lump sum if there is no claim) helps a person plan and avoid financial stress that more than likely would otherwise be a reality for him.

The numbers are clear, the facts are on the table and it’s rather obvious that protecting yourself is of utmost importance. I’m going to leave things there for now, but take the time to have a good think about this.

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