At FMI, we believe that life insurance benefits should protect your income against all risks that life may throw at you. Whether it be a temporary or long-term Disability, Critical Illness or Death, you or your loved ones need your monthly income to continue…
That’s why FMI believes the best way to do risk cover is through a combination of income and lump sum benefits.
Here are 7 reasons why:
1) Lump sum (or capital) benefits typically only cover people against the risk of a permanent disability, and yet most injuries and illnesses are temporary. FMI’s claim stats show that 7 out of 10 people will experience at least 1 injury or illness during their working career, and only 3% of these are permanent.
2) Lump sum pay-outs are a great way to settle debts and income benefits are perfect to cover the usual ongoing monthly expenses.
3) Income benefits make it far easier to work out the cover you need as the cover amount is directly related to your current monthly earnings, and the lump sum cover is related to the amount of debt you have.
4) There is this perception that income benefits are expensive, however income cover is usually a far more affordable option to the lump sum equivalent.
5) Income benefits can cover you for multiple claims, whereas lump sum benefits do not typically pay-out for multiple claims. According to our claim stats, you’re 3 times more likely to claim again after your first claim, either due to a related illness/injury or deteriorated health.
6) When using lump sum only benefits for Disability, Dreaded Disease and Death, it’s very difficult to accurately determine the amount of cover you really need. Factors such as inflation, interest rates, investment returns and earnings all make these cover assumptions risky.
7) In addition to the planning risks of a lump sum, there are a number of other risks associated with a large sum of money – the possibility of the money running out before you or a beneficiary dies, or being tempted to spend the lump sum pay-out on luxuries like expensive holidays or cars, leaving nothing to pay the bills.