This morning started the same as most other mornings in the office, assisting clients, making calls and sending documentation out. A normal morning until…
We receive a phone call from one of our clients, let’s say her name is Ms G.
Now Ms G is a widow for a few years now and she has been able to adjust to a lifestyle of receiving just her income. When her husband passed away she did receive lump-sum payouts of death cover, but she used this money to her own discretion. Resulting in the fact that these days she only receives her own working income. We have had several discussions and several times we have advised her to re-look at her budget and the spending of money on certain policies.
Like any client, she has the right to choose if she is going to follow the advice or not. These discussions have stretched over the past three to four years and every time Ms G decided to keep what she has and continue the same way forward…
This morning, though – we received a phone call from her and we are going to quote some of the content of this call…
“I am just calling to inform you that I have now cancelled all those **** Bank policies”
We could at first not understand why she called to inform us of this action and proceeded to inquire what happened.
“Well it is just like you said – Yvonne – I was wasting my money”
It turns out that the **** Bank has phoned her this morning, trying to sell her on additional benefits to the one policy. The sale was accepted by Ms G and they proceeded to the “Underwriting” of the policy, which in effect is the medical questions…
Halfway down the list of questions, the sales agent, ask her if she had previous heart problems… to which Ms G answered – YES.
The sales agent continued with a few more questions, one of which was ‘are you a diabetic?’. Again Ms G answered – YES.
Apparently, after a few seconds of silence, the agent asks her how did she obtain the original policy. To which Ms G answered – **** Bank sales agent phoned and sold her the cover over the phone…
And right here dear readers is where the proverbial hit the fan…..
Let us explain…..
- Ms G has more than one medical condition, present and in her past history.
- These conditions include, but are not limited to cancer, low blood sugar and now high blood sugar, life-long heart condition and so forth
- Further, Ms G has had a couple of operation in her life of over 55 years
Taking all these factors into account, she cannot just obtain any type of insurance; she has to look very carefully at the detailed cover limitations and exclusions of any policy. She needs to ensure that whichever cover she decides to implement does cover these conditions past history, present existence and possible future complications… IF NOT – she will be wasting her money!
Wasting her money is exactly what has happened – our words rang true in her ears when the sales agent stated…
“But Ms G – they should not have sold you this cover, as this cover will not pay out in any event to you due to …”
We hate to be the messengers delivering the bad news newsflash – but this is how these small policies work! These Bank policies that are sold to any Bank client are not always the best choice for any client. The structure of the cover against the applicable premium is constructed to fund a pool of “Potential Healthy Clients” that might one day claim – if they have not cancelled the cover beforehand. And R50 to R100 a month is not a lot, these premiums mostly go un-noticed by clients for years.
BUT these policies have very specific claim clauses, to the extent of which is sometimes remarkable that the use of the policy could be questioned… And so it was with all these policies that Ms G had from the bank.
Ms G has spent on average R300 a month on these policies – which now she has lost all those contributions due to the platform of the policies being short and long term insurance. A total contribution of R10,800-00 over 3 years… GONE! And as MsG rightfully said:
“I could have used that for my vehicle exspenses this year… which as you know I had to borrow”
Readers this is what we would call ‘flushing your money down the drain’ and not making your money work for you…