COLUMNS • INSURANCE
Why premium cover is important Is premium cover the most important product a life and health insurance adviser should recommend? Asks Steve Wright of Partners Life.
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eaving the answer to this question aside for the moment, how does premium cover/waiver of premium feature in your recommendations? Does it feature at all, or do you see it simply as something “insurers insist on” with disability products like income cover or mortgage repayment cover? Does your client understand what premium cover does?
What is premium cover? Like all products, the name does not necessarily tell you what it actually does, and even when products seem to do the “same job”, they may not do it the same way or as comprehensively. It takes some research to determine what each product does and does not do (this is a major reason why advisers are valuable to their clients). Premium cover as a product, is typically a disability product: it “pays” (waives) the policy premium if the life insured is disabled (meaning they are unable to work). The definition of “disabled” under premium cover typically mirrors the definition of disability in income cover or mortgage repayment cover, but it might not – something you should check. Cover that waives premiums when a life insured is disabled is what I want to discuss in this edition of TMM.
What does premium cover do? Premium cover typically waives policy premiums due for the period while the life insured is disabled or until the end of 032
TMM 03 • 2021
‘Some providers do allow premium cover even if a life insured only has life, trauma, or medical insurance on their policy’ the premium cover payment term, again typically, age 65 or 70, after a selected waiting period – more stuff for you to check. It is also important to check what premium a particular provider’s premium cover will waive on total or partial disability. For instance, is it: • the life insured’s income protection or mortgage repayment premiums due only • the life insured’s premiums for all benefits covered on the policy • the total policy premium (ie including all benefits for all lives insured on the policy)? Please also check to see whether or not the premium cover benefit will be apportioned (premiums only partially waived) on partial disability. If it is apportioned, your client will have to pay the remainder of the premium not waived themselves. Premium cover typically only waives policy premiums on disability if the person disabled is actually covered for
