What Does It Cover and How Does It Work?
Old Mutual Protect Life Cover gives you financial security. It’s a safety net for you and your family when things get tough.
The Main Safety Net: The Lump Sum Payout
The main thing about this policy? It’s a big, fat cash payment. It pays out if the person covered passes away, or if they get diagnosed with a terminal illness. This money can be a total lifesaver for your family, helping with stuff like:
- Paying off debts (like a home loan or car finance)
- Supporting daily living costs for your family
- Ensuring children’s education is covered
- Leaving something behind as a financial legacy for your loved ones
How Much and When Old Mutual Pays.
The amount of cover? That’s all sorted when you buy the policy, and it’s right there in your Personal product and benefit details. Once they say the claim’s good and all the paperwork’s done, the money goes straight into a South African bank account. You’ll get the exact amount you agreed on for the date the person passed or got that terminal illness diagnosis.
Example: So, like, Sarah’s got an Old Mutual Protect Life Cover policy for R1,000,000. If she passes away or gets a terminal illness, Old Mutual will give that R1,000,000 to her family, or to Sarah if it’s the terminal illness thing. This cash can totally help her family pay off the home loan, cover daily stuff, or even sort out the kids’ education. It’s a big help during a rough time, you know?
Understanding the Costs: Your Premiums.
Okay, so like any insurance, you got to pay a regular premium to keep your cover going. That’s just what you pay for this financial safety net, hey?
What and When You Pay: “Until the premium end date, you must pay all premiums on their due dates.” Your policy will tell you what you’ll pay first, when that first payment’s due, how often you pay (like monthly or yearly), and when you’ll stop paying. Simple!
Grace Period: Old Mutual gives you a bit of a break here. You get a 45-day grace period to pay each premium after it’s due. So, even if you’re a little late, you can still catch up without instantly losing your cover. Phew!
What Happens if You Miss Payments:
- First Payment: If you don’t pay your very first premium within 45 days, your application’s just cancelled. The policy never even starts, and you can’t get it going again. Bummer.
- Later Payments: If you miss a payment after the first one, and don’t pay up within that 45-day grace period, the policy will be cancelled. And if you make a claim, and you had some missed payments from when the policy was active, Old Mutual will take those out of your payout. Just so you know!
- Getting Cover Back: If your policy gets cancelled ’cause you missed payments, you might be able to get it going again. Usually, you’ve got about six months after it’s cancelled to sort things out. Old Mutual might ask for some info and could restart your policy – but the payments or cover might be different, hey? Super important to remember: you’re not covered from when your policy stops until it starts again!
- Multiple Cancellations: If your policy gets cancelled again after they restarted it for you, you can only ask to restart it if you’ve been paying your premiums properly for at least six months since the last restart. So, like, don’t keep cancelling!
- Example: So, like, Sipho’s monthly payment is due Jan 1st. He’s got ’til Feb 15th (that’s 45 days) to pay. If he misses it, his policy is cancelled. If it was his first payment, the whole thing’s just void. If he misses a payment and his policy gets cancelled in March, he’s got ’til September to try and get it going again.
When Your Premiums Will/May Change: Your premiums might change, okay? Old Mutual will always tell you if they do. Here’s why that could happen:
- Regular Yearly Increases: Your premium can automatically go up each year. They call it a “compulsory yearly premium increase.” This increase can be a fixed percentage you pick, or it can be “age-linked.” That means it depends on how old the person covered is on their next birthday. Like, it’s 0% for folks under 31, but it can hit 10% for those over 60. These increases help your cover amount stay strong over time, ’cause of inflation, you know? You can change your yearly premium increase whenever you want.
- Regular Reviews: Old Mutual sets premiums based on what they think things will be like in the future. But stuff changes, right? So, they’ll “review your premium or the cover amount at the end of each guarantee term.” That means they might keep it the same, make your premium go up, or change your cover amount.
- Changes in Law: “We may change the premium at any time, even before the next review date, if the cost of providing cover changes significantly because of changes in tax or other laws.” So, if new laws come out that make it way more expensive for Old Mutual to give you cover, your premium might change, even if it’s not your usual review time.
- Policy Changes You Make: If you change your policy – like, you want more or less cover – your premium will probably change too.
- Optional Cover Increases: If you choose to have your actual cover amount automatically go up each year (that’s separate from the compulsory premium increases), your premium will also go up to pay for that extra cover. If you pick both types of increases, your premiums will go up because of both. Double whammy!
- Example: So, like, Thandi’s 30 and has an Old Mutual Protect Life Cover policy. When she turns 31, her premium might automatically go up by 4% if she chose that age-linked increase. Later, if the South African government slaps a new tax on insurance companies, Old Mutual might change premiums for everyone, including Thandi, to cover those new costs, even if it’s not her usual review time. Wild, right?
Choices of Add-ons (Features and Benefits)
The main thing with Old Mutual Protect Life Cover is that big payment, but the policy also has cool features, or “add-ons,” you can pick to make your protection totally you.
Cashback: This is a sweet bonus! “On each cashback anniversary, we will pay a percentage, as shown on Personal, product and benefit details of all the premiums that we have received for the contract since the previous cashback anniversary and while cashback existed on your contract, to the cashback beneficiary.” So, you can get some of your premiums back at certain times (usually every five years), as long as your policy’s active and that cashback thing is still on your plan. Nice!
- Example: So, like, if you added cashback on July 1, 2020, your first cashback payment would be July 1, 2025. If you ditch the feature on June 30, 2023, you’d still get a cashback payment on July 1, 2025, but only for the premiums you paid between July 1, 2020, and June 30, 2023, as long as your main policy hasn’t been cancelled. Got it?
Old Mutual Rewards: “You may choose to become a member of the Old Mutual Rewards Programme (the Programme).” This program lets you earn points, and by joining, you actually help Old Mutual get a better idea of your policy’s costs and risks. If they save some cash because of that, they might even share some of those savings with you! How cool is that?
Example: For example: If you sign up for Old Mutual Rewards and actually do what they ask regularly, you could earn points that lead to savings on your policy over time. ‘Cause Old Mutual uses your info to understand stuff better and then passes those savings on to you. Win-win!
Diving into the “Terms and Conditions”
Let’s review some important rules and clarify the language in your Old Mutual Protect Life Cover policy to make sure everything is easy to understand.
- “What is a replacement owner?” “A replacement owner is a person who will take over the ownership of the contract if it continues after your death.”
- Simple Explanation: So, the policy owner can name someone to take over the policy if they die. This just makes sure the policy keeps running smoothly. You got to name this person while you’re still alive, though. If you don’t, the person sorting out your stuff after you pass (the executor) will have to name a new owner. Just a heads-up!
- Example: Sarah gets a policy and names her daughter, Lerato, as the replacement owner. If Sarah passes, Lerato automatically takes over. This is key ’cause it means the policy can keep protecting people for ages, like paying for a kid’s education years down the line. Smart, right?
- “What is a beneficiary?” “A beneficiary is a person who will receive the cover amount when it becomes payable.”
- Simple Explanation: This is the person (or people!) you choose to get the cash from your policy. If you’re still around when the money pays out (like for a terminal illness), you can take it yourself. If you’re not, Old Mutual pays the money to anyone you named who’s still alive. If you named a few people and some have passed, their share gets split among the others. Just make sure Old Mutual knows about any changes to your beneficiaries before you pass away, okay?
- Example: You name your three kids, Lindi, Themba, and Zama, to get equal shares (one-third each). If Themba passes before the policy pays out, Lindi and Zama would each get half the money. If you picked for them to get 50%, 25%, and 25% and Themba passes, Lindi would get an extra 16.67% (two-thirds of Themba’s 25%) and Zama an extra 8.33% (one-third of Themba’s 25%) on top of their amounts. This means the money goes straight to your loved ones, no long legal drama! Phew!
- “When does cover start?” “The cover starts on the cover start date for this benefit as shown on Personal, product and benefit details.”
- Simple Explanation: Your insurance officially kicks off on a specific date, and it’s written right there in your personal policy stuff.
- Example: If your cover starts July 15, 2024, then any death or terminal illness on or after that date could be claimed, as long as you follow all the other policy rules. Got it?
- “When does cover stop?” “The cover stops: when the insured person dies, if we do not receive your premiums and the grace period has passed. or if your contract is cancelled whichever happens first.”
- Simple Explanation: Your insurance cover will stop for three main reasons, whichever one happens first: When the person covered by the policy passes away (that’s when the money pays out, hey?). If you don’t pay your premiums and that 45-day grace period runs out. Or, if the whole policy gets cancelled, either by you or by Old Mutual because you broke a policy rule. Just so you know!
- Example: If the person covered passes away, the cover stops, and they start getting the payout ready. But if you don’t pay premiums for 45 days after they’re due, the policy stops covering you, even if the person’s still alive. So pay up!
- “When does cover for terminal illness stop?” “In addition to the reasons listed under When does cover stop?, the insured person’s terminal illness cover stops 12 months before the cover end date shown on Personal, product and benefit details.”
- Simple Explanation: That terminal illness option? It stops being available in the last 12 months before your policy ends. So, if you get diagnosed with a terminal illness in that final year, you won’t get the early payout. But don’t worry, the payout for death would still be active until the policy’s very last day.
- Example: If your policy ends Dec 31, 2050, the terminal illness benefit doesn’t apply to the year 2050. So, a terminal illness diagnosis in 2050 won’t get you that early payout. Just a heads-up!
- “When will Old Mutual not pay the cover amount?” “We will not pay the cover amount: if the insured person’s death or terminal illness is before the cover start date, or if the insured person’s death or terminal illness is because of an excluded event, activity or condition (as explained below).”
- Simple Explanation: Old Mutual won’t pay if: the person covered dies or gets a terminal illness before the cover started, or if it’s because of something they said they won’t cover (that’s explained below). Fair enough, right?
- Example: If someone gets a terminal illness diagnosis on June 1, 2024, but their policy’s official cover start date is June 15, 2024, you can’t claim. ‘Cause it happened too soon, you know?
- “Excluded events, activities or conditions” “We will not recognise the claim if it is directly or indirectly caused by an event, activity or condition that is specifically or generally excluded.”
- Simple Explanation: They won’t pay claims if the death or terminal illness is linked to certain things or risks Old Mutual just doesn’t cover. A big rule? Old Mutual won’t pay if the person covered dies by suicide within the first two years of the policy. Just so you know.
- Example: If the person covered dies by suicide 18 months after the policy started, no payout for life cover. But if it happens 25 months after it started, it’s generally covered (as long as nothing else is excluded). See the difference?
Your Path to Informed Choices
Understanding an insurance policy like Old Mutual Protect Life Cover can feel like a lot, right? But breaking it down makes it way simpler. This article just helps by telling you what this life cover offers, how much it costs, and the important rules.
Life insurance is a safety net for your loved ones when they really need it. By knowing all this stuff, you’re making a smart choice about your protection. For all the specific details about your policy, always read your policy documents or just chat with Old Mutual or a financial advisor. Stay well.
