Insurance market gets a new player

Shane asks: There is a new company frank.net on the market. They offer products in a very simple and easy to understand format and I like their salary protector package. Very useful in this uncertain job market. Have you heard of them and would you say they are solid? Are there similar products with other companies?

Maya replies: Frank.net has definitely launched with little fanfare considering that its parent company is Liberty. Perhaps this was done on purpose so not to antagonise the Liberty broker network.

Frank.net is another direct insurance company like 1Life Direct and Instant Life. They are able to cut costs by going directly to market without using brokers.

It certainly has some credible names behind it. Apart from being a Liberty offering, the CEO is Lenerd Louw. Louw was behind 1Life Direct which has been reasonably successful, so he knows this game well. The re-insurer is Munich Re which is a very large global insurance company and they underwrite the claims.

In terms of their salary protector the fact that they pay you out if you are retrenched is a first as far as I am aware. Most companies offer income cover if you find yourself out of work because of illness, but not due to retrenchment.

The usual retrenchment cover is usually to do with insurance where your installments are paid for a period of time. To receive up to 75% of your income is a great feature.

The website is very simple and user friendly, I got a life cover quote in a matter of minutes. I ran exactly the same details for an Instant Life quote and Frank was R100 more a month. But you need to understand what you are getting.

I cannot tell from the site whether the premium was age rated or level premium which would have a significant impact on the cost. Age rated would be cheaper now but increase significantly as I got older, level premium would average out my insurance costs over time with a set increase each year. I am also not sure how long the premiums are guaranteed for.

The whole direct insurance model is starting to grow significantly. The upside is that the premiums are lower as there are no commissions and using internet based technology lowers costs generally.

The downside is that you need to have a lot of information to make an informed decision — this is something a broker would be able to do. Which suits you better age rated or level premium? If you are a good saver and building up assets age rated may work better for example.

You also need to look at the claim statistics. The whole pay off line on the Frank.net is that they pay. If you opt for a company with lower premiums but they don’t pay when you need it is not exactly what you are after either.

The new direct companies still need to develop a decent track record but Liberty as a company does have a very strong track record for paying claims.

It still pays to shop around with a broker as the premiums are not always that much lower depending on the risk levels of the insurer and how your profile fits their existing risk profile.

I haven’t done this exercise with Frank but a few years ago when I compared my life and disability cover through a broker (Liberty, coincidently) with 1Life Direct, the premium was only R20 less a month.

Having a broker to deal with claims and assisting my family if something happened to me felt worth the extra R20.

Like all things, you do need to do your homework, but in terms of reputation, Frank seems above board.

Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information.

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Maya Fisher French
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