The recently completed soccer world cup got me thinking.  You don’t simply pitch up at the world cup and win it….
…no, a few things have to happen:

  • You have to have a good coach and game plan;
  • Your best players have to be on form and in peak condition; and
  • You have to be in the tournament to have any chance of success, for example South Africa didn’t qualify so we couldn’t win it.

Nobody can discount the importance of a good coach.  His (or her – we’re not sexist here) role is to ensure that the strategies and plans are in place, players are fit and weaknesses addressed.  He is ultimately held accountable for the quality of the game plan.  But…the coach doesn’t play the game.  That responsibility sits with the players who must buy into the game plan and do the work to ensure they are fit and of form.

A player doesn’t start training/planning a week before the tournament; instead it takes years of dedication and focus.  The team goes in with a strategy for the tournament, a game plan for each match but it is up to the players on the field to deliver.

Lastly, like France, you have to be in the game to win it.  You cannot be a spectator casual “competitor”.  You have to be there and to get there you have to meet certain qualifying criteria.  So, unlike South Africa who missed the tournament or Germany who got knocked out, you need to qualify for the tournament.

Application to financial success
I am by no means a soccer fanatic, which begs the question why did this get me thinking?

I realized that attaining financial success[1] is no different to winning the world cup and, in short, breaks down to the same principles.  First, you need a good coach and in this game that role is played by the benefit counsellors and financial advisors.  A good one helps you understand your weaknesses and develops the long term strategy.  He also assists with the short-term planning required for eventual success.  However, like the coach, the advisor can only take you part way there; it is you (the player) that has to deliver on the strategy and day-to-day plan.

In order to do so, you must also meet certain qualifying criteria, i.e. you need to know the rules.  For the financial success game, the rules are governed by the policy of the products you choose.  Again, like in soccer where each referee applies the rules differently, each policy has its nuances and subtleties.

Seldom is this more apparent than for income disability benefits.  That is, insurance cover that replaces your income (or part thereof) once you meet certain specified criteria. These criteria normally relate to an inability to perform particular functions.  For many of us these benefits are provided by our employer in the form of group insurance contracts.  However, very few people understand the terms of these contracts and yet advisors seldom receive enquiries requesting assistance.

Most group insurance policies have disability definitions that depend on your occupation or job (these two are distinctly different as explained below).  They also include terms related to the period for which a specific definition applies.  Lastly, there are conditions related to where an individual may be deemed to work.

  • Occupation versus Job

Often employees have no idea what cover they have under their group policy.  Due to the lack of awareness the first misunderstanding normally occurs with the definition of disability (i.e. “what work must I be unable to perform in order to qualify for disability benefits?”).  The most common definitions are based either on occupation or on job.

An individual’s job is the duties he performs as part of his current responsibilities.  This contrasts with a person’s occupation which refers to the broad category of roles into which he fits.  That is, occupation is the group of positions that entail similar qualities, responsibilities and interests but usually includes (or excludes) some functions beyond the specific job.  A useful example is to consider a mechanical engineer designing electric generators.  His job is electrical generator design since this is the actual day-to-day function he performs.  By contrast, his occupation is engineering since he is qualified to act in a broader engineering capacity than the, relatively, small field of generator design.

A further complication is the typical inclusion of alternative occupation definitions.  These are usually either “suitable alternative” or “any alternative”.  As the name suggests the definition of “any alternative” considers the entire suite of occupations, roles, positions or careers.  This is the broadest category of employment and therefore the easiest for which to qualify as employable.  Put differently, this is the most difficult definition on which to qualify for disability since the claimant must be unable to perform the functions required of any position.

A somewhat narrower definition is “a suitable alternative”.  On this basis, the person will be assessed against his (in)ability to perform the functions of a job that is suitable given his qualification and experience.  For example, the mechanical engineer discussed above can reasonably be expected to act as a designer on elevators (if he is able) based on his qualifications.

  • Own employer or any employer

The second area of confusion surrounds the place of employment, i.e. whether the definition considers employment at you current (own) employer or at any employer in the open market. Under the own employer scenario a claim is assessed against the ability to perform the required functions within the framework of the member’s current employer.  For example, an engineer suffering from vertigo may be unable to perform his duties with his current employer if he is working on an oilrig.  However, the same engineer may be capable of working for another company where he will not be required to work in such a dangerous environment.

  • Initial and extended periods

The last component of most definitions is a distinction between an initial period and an extended period.  The reason for confusion is that two different disability definitions normally apply for the initial period and the extended period.  During the initial period (usually 2 years) claims are commonly assessed against a narrower definition (i.e. easier to claim) while assessment during the extended period is generally against a broader occupation definition (i.e. tougher to qualify). It is useful at this point to consider an example.  The most common group insurance definition is:

  1. During the first two years (initial period): An inability to perform own occupation with own employer
  2. Thereafter (extended period): An inability to perform a suitable alternative occupation in the open market.

Revisiting the example of the oilrig engineer, it is clear that he may qualify for disability during the initial period since his vertigo may prohibit him from performing his own occupation within the dangerous environment of his own employer.  By contrast, during the extended period he may not qualify for disability since he may be able to perform other engineering, or similar, functions with another employer in the open market (or even with the same employer in another suitable capacity).

  • Returning to work

This example demonstrates that qualifying for the benefit initially does not mean qualifying for life.  Other circumstances also exists where a member may qualify for a period but then cease to qualify at some future date which, typically, this happens on three scenarios.  The first was already discussed, where a change of definition occurs after the initial period.

Second, the income benefit will cease upon the death or retirement of the clamant.  The third scenario that is often neglected in consideration is that a member may recover, either fully or sufficiently, to return to work.  Seeing as the insurance cover is to replace an income when a member is unable to work it stands to reason that it must be expected to cease when a member is again able to resume work. As stated earlier, this may be as a result of full or partial recovery.

It should always be the intention for an individual to recover and for case management/disability support endeavours to achieve this outcome.  While this is indeed a positive from an insurance perspective it is not an insurance imperative, rather it is a social imperative in the interests of the insured member.  In particular, research shows that there is significant value inherent in the activity of working as well as significant long-term financial benefits (e.g. from a retirement planning perspective).  Returning to the soccer analogy from earlier – you want your star player on the field until the final whistle.

So, you can either be a player contesting for the win or be an observer watching the game unfold from the sidelines.  As the star player in your team, it is important that you are in the game and in the best shape to make it to, and through, the tournament.  Knowing the rules of the game is the first step and having a good coach will assist you with the strategy and implementation.

Don’t start training a week before the tournament when it’s too late…get in the game!

Warm regards
Reinier van Gijsen on behalf of Michele Jennings

[1] Whatever that might mean to you.