The OUTbonus on our life insurance cover

Back to OUTworld
9 November 2015
Our product offers pure death, disability and critical illness cover. We do not offer any form of endowment policy.

In a recent article in the Sunday newspaper Rapport, it was alleged that OUTsurance does not really pay a “bonus” to our life insurance clients, as our product is nothing more than “a life insurance and endowment policy rolled into one”. This is inaccurate.

OUTsurance entered the life insurance market in 2010 knowing that many clients receive poor value for money. Life policies are typically the first expense people cut in times of financial need – sometimes shortly after having taken out the policy. This means that the client’s initial premiums only covered the insurance company’s administrative costs as well as the broker’s commission, without the client enjoying cover long enough to submit a claim. Many industry experts have previously analysed this financial loss.

We, therefore, launched with a unique approach: let’s incentivise clients to keep their life insurance cover intact. Our product offers pure death, disability and critical illness cover. We do not offer any form of endowment policy. The prospective client can compare our premium for the cover he needs with what is available in the market. Sometimes you may find a better offer from another insurer, but often the OUTsurance premium for the same cover will be lower than what’s available elsewhere.

Our client then has the additional option of taking out the OUTbonus. It constitutes, on average, 33% of the total premium. (This ratio varies from client to client and is clearly communicated to each client.) The OUTbonus benefit then guarantees the client the repayment of all his premiums after 15 years, on condition that the policy is still in force and that the client did not claim in that period.

The question is therefore whether the OUTbonus offers good value for money. Take a client who pays a total premium of R900 per month, consisting of R600 for his life cover and R300 for his OUTbonus. The OUTbonus, therefore, guarantees him a cash payment of R162,000 (R900 x 12 x 15) after 15 years. The only cost for this benefit is R300 per month.  This implies a guaranteed return of 13.5% per annum, without any tax implications. Where else will you find a guaranteed, after-tax return of 13.5% with no additional costs?

The Rapport article further referred to an obscure clause in our documentation which apparently places an onus on the client to go for an HIV test. Because we are able to give our clients direct, telephonic advice, we ensure that clients are fully aware of any medical underwriting requirements which may be relevant to their cover, and we gladly arrange for a nurse to visit the client – all at our expense.

OUTsurance is proud of the value for money and unique benefits our life insurance product offers. If something were to happen to our client, he (or his dependents) can claim against his policy and bargain on our world-class service. If not he can look forward to a substantial OUTbonus pay-out by simply keeping his policy intact.

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