When Momentum reflected on life insurance pay-outs for Covid-related deaths in October last year, it recorded at around R160 million, which seemed like a big number. Fast forward to end February 2021, and it pales in comparison to the staggering R750 million worth of Covid related death claim pay-outs by Momentum.

This does not, however, reflect the overall value of claims paid out for Covid-related claims since the onset of the pandemic as it talks only to one life insurance product range. Therefore, the total value of Covid death claim pay-outs by Momentum is expected to be even more significant.

George Kolbe, Head of Retail Life Insurance Marketing at Momentum, explains that the numbers relating to both the number of claims and the rand value of the pay-outs were dramatically higher during the second wave of infections, with the financial services group recording a 205% increase in the rand value of the pay-outs and a more than 140% increase in the number of Covid-19 death claims in the second wave, compared to the first.

Kolbe recently shared insights and statistics related to pay-outs and claims since the onset of the pandemic while in conversation at Momentum’s first Science of Success for Media event for 2021.   

In terms of gender split, he says that Momentum saw about two times more Covid-related death claims coming through for male clients as opposed to females. Unsurprisingly, considering how the elderly is the age demographic that has been most vulnerable to the virus, most claim pay-outs during this time were related to those between 60 and 80 years of age.

The devastating impact of the pandemic has served as an unfriendly reminder of our own mortality. Nobody likes to talk about death, but it has become an important discussion to have. While one can never be prepared for it, we can certainly put measures in place so that when the time comes, our families and loved ones are able to at least have a little bit less stress to deal with.

“With the threat of a third wave, and possibly even successive waves thereafter, depending on whether South Africans follow safety protocols and the success of the vaccine roll-out, it is strongly advisable to speak to a financial adviser and to have adequate cover in place,” Kolbe says.

“While money doesn’t take away the emotional pain that a family suffers, it will at least ensure that they are not financially exposed during a time of emotional difficulty.”

While the costs of death are difficult to quantify, there are significant expenses that come up when someone passes away. There will be funeral expenses that come into play and normal bills and monthly expenses to cover, while taxes and estate duty kick in. The reality however is that most South Africans do not make provision for these events in the form of an emergency fund, for various reasons. He says that these needs can be addressed cost effectively with life insurance, and life cover specifically. So, how do you know which cover is right for you?

“Life cover that pays a lump sum is probably the go-to solution for most people, but there are more specialised versions of life cover that address the estate administration costs and  professional fees that would typically be associated with a loved one passing away. If the person who passes on was the breadwinner in the family, specialised forms of life cover exist to replace that loss of income.”

Further, he says, you may want to think about leaving some sort of legacy behind for family, friends or a charitable organisation. This is what has earned life insurance the title of the ‘ultimate gift’ to leave behind for a loved one as it can be used to give someone a kickstart in life, such as a child who would be able to then get an education.

Often, when receiving a lump sum pay-out, it arrives during an emotionally fraught time, which makes it difficult to decide what to do with the funds. However, ensuring that a Last Will and Testament is in place will help to remove this stress as it provides some direction for those who inherit the money as to how it must be spent.  

Jeffrey Wiseman, CEO of Momentum Trust Limited, who was also speaking at the Science of Success for Media virtual event, says that many people have now come to the realisation that life is not guaranteed and have recognised the need to make sure their affairs are in order, which starts with getting a proper financial plan in place, which includes a will.

“Not only have we experienced an increase in inquiries regarding wills over the last year, but also regarding trusts. In our business alone, the number of deceased estates reported has almost doubled in the last year. The second wave was also far worse for us in terms of the number of deceased estates coming in. It is estimated that approximately one third of the estates were related to Covid-19 deaths.”

He explains that the importance of having a will in place cannot be underestimated. “When looking out into the world, we assume that everyone else has their financial affairs in order with an up-to-date Will. But we saw how the death of Black Panther actor Chadwick Boseman without a will required his widow to approach the California court to be appointed as administrator of his estate, which was worth just short of one million dollars.”

The situation is not dissimilar in South Africa and while the process is different on a practical level, dying without a valid will comes with its own set of complexities. In this scenario, your estate will devolve according to the laws of intestate succession. And what that essentially means is that your estate will be transferred to your closest living relatives. The problem though, Wiseman says, is that your closest living relatives may not necessarily be the people that you would choose to inherit from you.

“What we have seen from winding up deceased estates for a number of years is that a poorly planned estate can either cause new family disputes, or exacerbate existing ones. The one important thing to remember is that when a person passes away, money is involved, and when money is involved personalities change. It then becomes really important to take the time to make sure that your financial affairs are properly planned for, and that your Will speaks to the financial plan.”

Wiseman noted other complexities of not having a Will such as that children’s inheritances may need to be paid to the Guardian’s Fund, which is administered by the Master of the High Court. “And when it comes to accessing funds from the Guardians Fund, one has to go through the Master’s offices and that can be practically onerous – especially during times of Covid-19 restrictions. So certainly, intestate succession is something everyone should try to avoid.”

He explains that it is easy to get a Will place, and that it is something that can really assist in making sure that the succession process is as smooth as possible. The starting point is to make sure that it’s legal, signed with a physical signature in the presence of at least two independent witnesses, and stored safely.

At the start of lockdowns globally, in some jurisdictions such as the United Kingdom, more people were going online to update their Wills. “And so, as Momentum Trust, we recognized the need to really respond to that and make sure that clients have alternative options available to them in order to update their wills,” explains Wiseman. Momentum teamed up with its partners in the UK, Arken.legal to develop a Direct to Client system that is available to the South African public at no charge. This online system, which is straightforward and logical in order, allows for individuals to develop a high-quality Will, simply by going onto the Momentum website.

Wiseman says that Momentum Trust has seen significant interest in the solution, “and as clients become more confident online, they will be more inclined to make use of this type of solution because, at the end of the day, the results produced don’t compromise the quality of the will. It is hoped that the increased awareness of our own mortality and the need to make sure that we have a proper financial plan, estate plan and will in place will remain long after the pandemic is over”.