Buy online
Life and funeral cover for your mass market clients offers them and their families a financial safeguard when they need it most. But with high lapse rates, retention in this market can be a challenge. Financial advisers have a number of tools they can use to keep lapse rates down, ensuring success for their clients and their business. 1Life Insurance Mass Market experts share this advice.
Use stop orders for premium payments
A stop order is a salary deduction, where the payment is deducted from the salary and paid to the service provider, such as an insurer, before the salary is paid into the employee’s bank account. The payment to the insurer should take place on or just before the salary payment date. A debit order is a bank account deduction, which happens after a salary is paid into a bank account.
Stop orders eliminate the risk of unpaid debit orders
Using stop orders for premium payments eliminates the risk of unpaid debit orders. And although the risk of unpaid premiums is not eliminated altogether, it is significantly reduced. 1Life Insurance stats show that mass market clients paying their premiums by stop orders have much lower lapse rates than clients paying by debit orders.
The success of the stop order payment method comes from the fact that it is a deduction off a salary before the employee is paid the salary, eliminating the risk of all the funds in a bank account being spent or withdrawn before debit orders are submitted.
Premiums don’t have to be budgeted for if they are paid via stop orders
Clients typically budget to pay all their expenses on a net salary amount, which is the amount paid into their bank. Budgets are balancing acts, and when ranked against items such as food, housing, transport and education costs, insurance premiums don’t feature as an essential expense, however much insurance is valued and appreciated. This often leads to a situation where funds are allocated to essentials first, leaving little or nothing left in the budget for insurance. When a client is paying a premium via a stop order, insurance is removed as a budget item as it has already been paid!
More benefits of stop orders
Stop orders offer premium certainty, resulting in more benefits for clients and advisers including:
- Access to a large potential client base – national government employs over 1.2 million people.
- Clients have a much higher chance of keeping their policies in force, which means valid claims will be paid.
- Advisers and their businesses have a more stable book, and hence, a more certain income stream.
- Advisers can save time they might otherwise spend following up on unpaid premiums via debit orders to engage with clients and grow their business.
- Advisers can qualify for more favourable commission structures for clients on stop orders, such as no clawbacks. Your 1Life Insurance broker consultant will have more details on commission structures and options available.
Setting up a stop order
Good news, SA national government stop orders are already available to you. Stop orders can also be set up for full-time employees with private or local government employers who offer these facilities through their respective salary systems. Your 1Life broker consultant can help you with this.
To set up a stop order deduction, a client needs to complete a stop order authorisation form from 1Life Insurance. The stop order contains details of the employee such as employee number and employer such as a department of national government. The form is then submitted to the employer, either systematically or electronically and the salary deduction of the premium is made from the effective date.
Ensure the stop order meets the 15% rule
Government employees are generally well paid, of the 1.2 million employees, over 55 000 employees earn more than R83 333 per month. It is very important to note that the salary deduction via a stop order cannot be more than 15% of the employee’s gross salary. If the premium amount is more, it will not be deducted. Advisers need to check this when completing the stop order request. In addition, stop order authorisations make allowances for premium increase such as a contractual increase on the anniversary of the policy, providing the new premium does not breach the 15% rule.
Your broker consultant will be happy to take you through the simple process and rules to successfully onboard a stop order client.
Opt for digital
The second tip to set clients up for success is to go digital. Advisers may have already heard this, but the evidence keeps mounting up of how digital processes and systems impress clients, save time, save money, help businesses grow, and more.
Digital makes processes more efficient and limits capturing errors, such as of ID and contact numbers, as these are verified in real time by the adviser, insurer and client. And, because applications can be processed and accepted immediately, advisers earn street cred as clients know they are covered when they receive confirmation via SMS.
Digital also impresses when it comes to claims, a sticky point for many mass market clients. These are the clients who remember the poor claims experience of a friend or relative or have read about a claim not being paid in the media. During the height of the COVID-19 pandemic, for example, some insurers got a reputation for not paying claims quickly. This was purely due to the volume of claims received in a short space of time, which meant insurers relying on manual claims paying processes were short of the human resources they needed to assess and pay valid claims. However, insurers such as 1Life Insurance with automated claims processes bypassed this problem. Want to impress your clients at the claims stage? Automated claims processes are a must.
Future protect your clients and your business
Improve your persistency and protect and impress your clients by setting up stop orders for premium payments and using the digital tools and platforms available. Your clients and their families will have the cover they need as premium payment is more certain, future protecting them and your business too.