COVID-19 | A message from Myriad and Investo for clients in financial distress

Following a number of enquiries on how Momentum will assist clients who are in financial distress during these difficult times, below please find more information on such assistance available from Myriad and Investo.

Myriad
Life insurance companies fulfill a vital role in society by assisting survivors or their dependants financially if they suffer an insured event, such as dying, a critical illness or a disability. The financial wellness of our clients remains our top priority and we remind our clients that the need for their cover is even more important during an economic and health crisis such as the one we are currently facing, especially if their health has been adversely affected in any way since they took up their cover.

Momentum strongly discourages clients from cancelling their life insurance in this difficult economic time and encourages them to explore every possible option to ensure that they maintain their cover to protect them, their families and their businesses financially if the worst happens.

Myriad offers clients two options to help them cope financially:

Option 1: Reduce cover to a more affordable premium

Momentum strongly urges clients to first contact their financial advisers to discuss the impact of this decision on their financial planning. Clients who decide to reduce their cover due to affordability challenges will have the opportunity to restore their cover back to original levels, but will be subject to underwriting.

Option 2: Myriad’s Premium Pause Option (available until 30 June 2020) – a temporary Premium Pause Option to support our financially distressed clients

Momentum applies accurate pricing to ensure that we charge insurance premiums that are appropriate to the level of risk that we cover. These premiums are necessary to collect revenue in order to run the business and pay for claims. However, we understand that in this financially troubling time some clients are facing tough economic challenges and may find it impossible to maintain any of their life insurance cover. Clients in extreme financial distress are therefore at risk of losing all their life insurance benefits. Momentum is proactively taking steps to support these affected clients with an option to pause their life insurance premiums.

What is the Premium Pause Option?

For clients who are facing financial difficulties and are at risk of losing all their life insurance cover, Momentum Myriad offers a Premium Pause Option (PPO) to temporarily pause their life insurance premiums and life insurance cover for three consecutive months while maintaining guaranteed insurability until their premiums are automatically resumed. Pausing premiums will normally result in all life insurance cover being forfeited for the period that the premiums are paused. However, if clients proactively apply for the PPO between 1 April and 30 June 2020, they will get free ex gratia life cover equal to 20% of their paused life cover benefit during the premium pause period. The ex gratia life cover will apply for the duration of the premium pause period at no cost to the policyholder, funded by Momentum. This will mitigate their financial vulnerability and exposure while they explore additional funding options to resume cover on all their life insurance benefits.

Please click here for the Premium Pause Option information leaflet, here for Premium Pause Option FAQs and here for the Premium Pause Option application form.

Investo 

We recognise that some of our clients are or may become in financial distress as a result of the COVID-19 pandemic and as a consequence, you will also experience cash flow pressure. We want to assure you that we have your interests and those of our clients at heart. To assist during this difficult time, we have designed a solution to provide some relief from the financial pressures and assist clients to remain committed to their savings goals.

Increased flexibility on contribution holidays

We first want to remind you that clients have two contribution holidays available on monthly paid contracts, each consisting of a maximum of two months. Exercising the option of a contribution holiday allows your client to skip contributions without incurring any additional charges or penalties. At least 6 consecutively paid contributions are required for the first contribution holiday to become available, and 12 for the second contribution holiday. This also applies after non-contractual contribution increases, ad-hoc single contributions and reinstatements.

Our enhanced solution involves temporarily slackening the rules around contribution holidays, as follows:
• We are increasing the available duration for the next contribution holiday from 2 months to 4 months. This comes at no additional cost.
• We are allowing contribution holidays earlier in the contract term by reducing the required number of paid contributions from 6 to 3 contributions for the first contribution holiday. This applies to new business as well as non-contractual contribution increases. Note that the enhanced option is only available where your client has not taken both contribution holidays yet.

Lower alteration fees
An alternative to contribution holidays (e.g. where clients have already utilised the benefit) is for clients to reduce or stop their contributions temporarily and then reinstate at a later stage when their financial position has recovered. We are also reducing the fixed Rand amount alteration fee on paid-ups and contribution decreases by 50% to relieve the impact on their contract values. The overall effect on charges for a client for making the contract paid-up and reinstating a few months later is therefore very small on any Investo contract.

These enhanced options and lower fees will be available from 10 April 2020 until 31 July 2020. Clients who would like to make use of it should wait until 10 April to ensure that they will qualify for the enhancements. Note that a contribution holiday can be backdated for 30 days. A client who cannot afford the next contribution, can still be one contribution in arrears on 10 April and apply for the enhanced contribution holiday to include that missed contribution.

Example 1:

A client has paid 4 monthly contributions but is unable to afford the next contribution which is due on 1 April 2020. The client can exercise a contribution holiday on 10 April which can apply from 1 April for the next 4 months. Thereafter the client will qualify for the second contribution holiday according to the standard rules and for the duration of 2 months.

Example 2:

If a client qualifies for a contribution holiday on 1 July 2020, it can still be taken for a 4-month period from that date, even if it is the second contribution holiday.

Regards
Stephen van Niekerk – Head: Retail Life Insurance
Philip du Preez – Head: Investo
Call Now Button