Life changes fast. Financial obligations, health status, and family dynamics evolve, sometimes gradually, sometimes in an instant. Yet, traditional life insurance policies are designed as rigid, one-size-fits-all agreements that don’t easily adapt to the realities of life’s twists and turns.
This is where claim-stage flexibility is becoming a critical innovation in life-risk products. Unlike conventional policies that lock consumers into pre-set payment choices, claim-stage flexibility ensures that when life takes an unexpected turn, your insurance is equipped to support you in a way that matches your evolving needs.
The problem with old-fashioned life insurance
Traditional life insurance is often structured as a one-size-fits-all product. It's designed at one point in your life and doesn't easily adjust when your needs change. Think about it: your family grows, you buy a house, your income changes – your insurance should adapt too. One of the areas where traditional life insurance may not keep up with your changing needs is in terms of your choice of pay-out at the claim stage.
Why you should care about claim-stage flexibility
Claim-stage flexibility means your insurance can adjust when you need it most – at the time of a claim. Instead of a fixed payout, you might be able to choose:
- A lump-sum: Get all the money at once;
- Recurring payments: Receive regular payments over time;
- A mix of both: Get a lump sum now and recurring payments over time.
This flexibility lets you tailor the payout to your family's actual needs at that specific moment. In other words, you have more control over your claim payment, when you know what your health and financial circumstances are.
How is life insurance changing in South Africa?
Forward-thinking insurers are moving away from rigid policies. They're offering more dynamic products that you can change as your life changes.
This means your insurance is designed to fit your specific needs. You and your financial adviser can work together to create a plan that aligns with your short-, medium-, and long-term goals. This helps you avoid paying for cover you don't need and ensures you're properly protected when things change.
What if I already have life insurance?
It's worth reviewing your policy to see if it offers any flexibility. Some policies have features that allow you to:
- Reallocate premiums: Use premiums for cover you no longer need to buy other cover that you need at that stage;
- Increase your cover without medical tests: Add more coverage without a full medical check-up (up to a certain limit).
What's the key takeaway for South African consumers?
Don't settle for outdated life insurance. Look for policies that offer flexibility and can adapt to your changing needs, especially at the claim stage. Review your existing cover and ask your insurer about options for customisation. A flexible policy gives you peace of mind knowing your family will be protected in a way that truly meets their needs, no matter what life throws your way.
* Hanlon is the executive director at BrightRock.
PERSONAL FINANCE