Policy lapses

[Shi]

https://www.iol.co.za/personal-finance/policyholders-beneficiaries-receive-r469bn-in-payouts-14316162

I just wanted to highlight the section below (no need to read the rest of the article)

In 2017, he says, some 2.7 million policies less than 12 months old were lapsed, compared with two million in 2016

How is it possible to have so many lapses (given for example the number of employed people in SA - around 10 million I think)? Sounds to me like the industry is selling to people who cannot afford these policies.

 

[ArtyLoop]

Indeed they are... Have you ever been harassed by these policy salespeople? I have, had one phone me again this week.

 

[beefymoocow]

Yeah sales people are to blame but its ultimately the policy holders fault. Most people o know enter these policies not even knowing the future increase.

I remember someone complaining their life policy increasing but when I read their contract it clearly states it will increase by CPI plus your risk factor.

Secondly most people don't understand the real cost of a lapsed policy. If I had to cancel my discovery life policy I could probably lose R1 million and growing in retirement, just to a save 1000 a month

 

[pinball wizard]

How is it possible to have so many lapses (given for example the number of employed people in SA - around 10 million I think)? Sounds to me like the industry is selling to people who cannot afford these policies.

Because the so called consultants are desperate to make some comm, they will sell you something, knowing you can't afford it, and that it will lapse, simply to make a sales number for the big life houses.

Sure, sure, blame the consultant, but to be fair, when I worked in the industry, for one of the big houses, we were forced into doing this by management to show a sales number they set.

 

[handyman007]

Because the so called consultants are desperate to make some comm, they will sell you something, knowing you can't afford it, and that it will lapse, simply to make a sales number for the big life houses.

Sure, sure, blame the consultant, but to be fair, when I worked in the industry, for one of the big houses, we were forced into doing this by management to show a sales number they set.

No one is holding a gun to your head, you don't have to buy the policy.

 

[Bruno123]

Yeah sales people are to blame but its ultimately the policy holders fault. Most people o know enter these policies not even knowing the future increase.

I remember someone complaining their life policy increasing but when I read their contract it clearly states it will increase by CPI plus your risk factor.

Secondly most people don't understand the real cost of a lapsed policy. If I had to cancel my discovery life policy I could probably lose R1 million and growing in retirement, just to a save 1000 a month

Exactly.
Nobody forced anybody into signing and committing.

Having said that it is still the Responsibility for a Salesman to give correct Advice and Explain what he/she is signing for making him no longer a salesman but an Advisor.
So get yourself an Advisor I suppose would be the answer

 

[Bruno123]

Because the so called consultants are desperate to make some comm, they will sell you something, knowing you can't afford it, and that it will lapse, simply to make a sales number for the big life houses.

Sure, sure, blame the consultant, but to be fair, when I worked in the industry, for one of the big houses, we were forced into doing this by management to show a sales number they set.

NO NO No

Just as the Policy Holder was not forced nor was the Advisor (Maybe a Salesman could be forced who was only concerned about there own pocket. But not an Advisor that was concerned firstly for the Client)