Bidvest Life 2023 Claims Report reveals the opportunities to cover young lives

Source: Supplied. Nic Smit, Bidvest Life product and pricing executive.

Presenting the report to its supporting financial advisers, Nic Smit, Bidvest life product and pricing executive, said their statistics indicated that millennials (28–43 years old) were 55x more likely to claim on their income-protection benefits than their death benefits in 2023.

This ratio dropped to 17x when looking at income protection versus death claims across all ages. In addition, he said, millennials accounted for 50% of all Bidvest Life’s income-protection claims in 2023, but only 12% of its death claims.

Many advisers have built their business on financially established clients who are now facing retirement. “In order to gain or maintain your competitive edge, financial advisers need to deliver value to their clients through products and services that solve for what they really need," said Smit.

“Much like trying to sell Brussels sprouts in the candy aisle of a grocery store, we must recognise that life insurance is sold, not bought. This requires a deep understanding of your client's needs and circumstances.

"For young individuals especially, financial advisers need to make life insurance tangible – helping millennials to see it as an essential purchase they are likely to benefit from multiple times throughout their careers. And the earlier they purchase life insurance, the more affordable it becomes.”

Income protection value

Bidvest Life’s 2023 Claims Report highlighted the two most common misconceptions young people hold about life insurance: firstly, that they don’t need it yet, and secondly, that it’s too expensive. But for younger lives, and across generations, income protection offers significant value at an affordable price.

“Even if your clients are young and healthy now, they need a safety net in case of an accident or illness that robs them of the potential to live the life they’re planning,” said Smit. “The younger a person is, the more affordable their life insurance will be, which can help you to attract younger clients.”

With income protection, clients have a very high likelihood of their claims being paid out. The report showed that 91.5% of all lodged, unique income protection claims were paid in 2023. The primary reason for non-payment was policyholders attempting to claim during their waiting periods.

The report also revealed that the average duration of an income protection claim was much shorter for younger policyholders than the overall average.

Given that income protection is usually offered with either a seven- or 30-day waiting period—the number of days a policyholder must be sick or unable to work before an income-protection policy begins to pay—waiting periods are especially important for younger individuals.

This is because younger policyholders often have shorter claim periods, which increases the risk of being unable to claim if they don’t have the appropriate coverage.

Once income-protection claims are lodged, benefits are paid out swiftly and efficiently. In 2023, Bidvest Life paid out 8% of income-protection claims in the first 24 hours, 33% within one week, 47% within two weeks, and 73% were paid within a month of submission. “Our Fast-Track Criterion drives quicker claims processing,” said Smit. “And clients can claim multiple times on income-protection benefits.”

Childbirth was the leading income-protection claim event among millennials, while cancer ranked among the top three reasons for claims across all age groups.

Building lifelong clients

In addition, mental illness was the fourth-most common reason for millennials claiming on their income-protection benefits. Deloitte’s 2024 Gen Z and Millennial Survey indicates that mental health is still a concern for younger people, with 40% of Gen Zs and 35% of millennials saying they feel stressed all or most of the time.

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Given that the oldest millennials are now 43, and childbirth is the biggest event being claimed for in this age group, this also presents an opportunity for you to build a pipeline of future clients by including their children into your financial-planning discussions.

For instance, clients could begin with the Child Protector benefit on a parent’s policy for children under 18, transition to Student Cover through the child’s own Event-Based policy from age 18, and then move to a Comprehensive policy when the child starts working and becomes financially independent, effectively creating ‘clients for life’.

The findings of Bidvest Life’s 2023 Claims Report show that younger people may underestimate their need for income protection. While Gen Z and millennial clients might view themselves as too young or healthy for life insurance, the report tells a different story.

“Income protection is an easy starting point when engaging younger clients,” Smit noted.

In addition, customers can add additional benefits that improve their cover even further. For example, with Bidvest Life’s Critical Illness (CI) Income, 130% of the insured income is paid for up to 12 months, regardless of whether the policyholder can work, with claims beginning at diagnosis – not when the client becomes unable to work.”

By targeting these demographics early and sharing these insights, you can help younger clients build strong financial safety nets before they need them – while also fostering long-term relationships that will grow over time.