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May 22, 2019

Protecting your clients through the Mid-lifer stage of life

<strong>By: FMI</strong>

<h2>Lifestage 3</h2>

<h3><b>Paving the way for the Mid-lifer. </b></h3>

<span style="font-weight: 400;">With April behind us, many South Africans return to work with the dim view of December in their sights. With its many public holidays and school breaks, April is an opportunity to reconnect with family and add a prized-moment or two to the memory bank. Whether it’s camping adventures with your cellphone-obsessed teenagers, or TV-time with your spouse, most of us feel the keen desire to make opportunities like these count. </span>

<span style="font-weight: 400;">It’s this pressing need to take stock, come up for air and appreciate what we’ve managed to accumulate in our lives so far, that really defines this stage of life. At FMI, we’ve called it ‘Mid-lifer’. </span>

<span style="font-weight: 400;">In this month’s feature, we’re covering those time-pressed, financially-squeezed individuals spinning to keep up with the demands of their growing teens and cosy lifestyle. </span>

<span style="font-weight: 400;">Whether they’re self-employed or salaried, their income is relatively stable and family, career and health tops the priority list. Though this is a time of progress and their income is steadily growing, various additional expenses (such as school or university fees) take their toll. </span>

<span style="font-weight: 400;">With more life experience under their belts, most Mid-lifers believe they’re sufficiently protected with a combination of Disability and Life Lump Sum cover in place. Their biggest concern is the support and comfort of their loved ones should they pass away, matched by the market with almost twice more Life Cover sold than Disability cover</span><span style="font-weight: 400;">1</span><span style="font-weight: 400;">. Even a larger portion of customers are yet to even consider income protection. </span>

<span style="font-weight: 400;">Financial advisers have an important role to play in recommending tailored solutions and assisting their clients in choosing flexible cover that fulfils their unique circumstances – now and in the future. We’ve pinpointed 3 powerful tips below to help advisers do exactly that:</span>

<ul>

<li><b>Calculate their future earning potential.</b></li>

</ul>

<span style="font-weight: 400;">By using FMI’s Future Income Calculator (available on our website), you can quickly and easily calculate an individual’s specific future earnings over their lifetime. And it will surprise them! They may assume little of their earning potential at this stage in life (before retirement), but a 50-year old earning R70 000 a month will still earn an incredible R20.3 million over their working lifetime</span><span style="font-weight: 400;">2</span><span style="font-weight: 400;">. </span>

<ul>

<li><b>Consider their risk reality.</b></li>

</ul>

<span style="font-weight: 400;">Using the example above, it’s crucial your clients protect their R20 million future earnings against 4 possible risk events - a temporary illness or injury; a permanent disability, a critical illness; or death. When we consider the probability each of these risks present, the solution becomes even more powerful:</span>

<span style="font-weight: 400;">A 50-year old, for example, has an 81% chance of experiencing a temporary injury or illness that will stop them from working for more than 2 weeks, during their working career. By comparison, they have a 14% chance of a permanent disability, a 34% chance of a critical illness and only a 11% chance of death during their working career.</span><span style="font-weight: 400;">3</span><span style="font-weight: 400;">  </span>

<span style="font-weight: 400;">If their greatest risk is a temporary injury or illness, but they don’t have income protection, how will they continue to meet their monthly financial obligations?  </span>

<ul>

<li><b>Cover them against all risk events.</b></li>

</ul>

<span style="font-weight: 400;">In this phase of life, a Mid-lifer requires a combination of income and lump sum benefits across Disability, Critical Illness and Life, to ensure they’re sufficiently protected against those long-term and short-term setbacks. </span>

<span style="font-weight: 400;">Income benefits are ideally suited to meeting ongoing monthly expenses, while lump sum benefits provide for any once-off costs, like settling large debts or estate duty. What’s more, by including temporary income protection, you are making sure your clients are covered for the most likely event of a short-term injury or illness.</span>

<span style="font-weight: 400;">Ensure that your clients have the right cover in place, for the right time in their lives - give them the freedom and financial security throughout life’s adventures (the good and the bad). Most importantly, this will help to deepen your customer relationships as you help them to appreciate the cover they have today, knowing their plans for tomorrow are taken care of. </span>

<strong><i>Look out for next month’s feature as we uncover the tips and tools for the EMPTY NESTER life stage.</i></strong>

<span style="font-weight: 400;">1</span><span style="font-weight: 400;">FMI Disability Cover Study 2016</span>

<span style="font-weight: 400;">2</span><span style="font-weight: 400;">FMI Future Income Calculator. 6% nominal growth, retirement age of 70</span>

<span style="font-weight: 400;">3</span><span style="font-weight: 400;">FMI Risk Stats 2019. Risk stats calculated on probability for 38-year old before retirement age of 70.</span>

<h3>In case you missed the first two Lifestages:</h3>

<a href="https://www.cover.co.za/3-steps-to-unlocking-the-potential-of-early-earners/" target="_blank" rel="noopener noreferrer"><strong>Read Lifestage 1:</strong> Early Earners</a>

<a href="https://www.cover.co.za/protecting-your-clients-during-the-adulting-stage-of-life/" target="_blank" rel="noopener noreferrer"><strong>Read Lifestage 2</strong>: Protecting your clients during the 'adulting' stage of life</a>

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