Many South Africans are in the dark about credit life insurance, but education and awareness can change this, says Tlalane Ntuli, the co-founder and chief operating officer of credit life insurance firm Yalu.
She says women have held South African homes together over many years, displaying a remarkable ability to save and make money stretch, even in the context of apartheid, poverty and migrant labour.
“It’s no exaggeration to say our mothers and gogos have been the bedrock of South African family life for generations,” says Ntuli. According to Yalu, women could be achieving even more if consumers understood better how credit life insurance works.
Yalu’s offering gives an opportunity to save money every month on their credit life insurance policies and earn a portion of their premiums back at the end of the credit facility. Ntuli says there are a number of challenges when it came to consumer education, one of which is that it is expensive, particularly for a small start-up with limited resources such as Yalu.
“We have to box smart in terms of appropriate messaging, to make sure it is simple enough for people to understand, and channels to use, to ensure we reach as many consumers as possible. What makes this challenge particularly frustrating is that Yalu is a job that bigger brands should be taking on. We have gone as far as inviting the big banks to use a platform we paid to educate consumers, but received no responses from any of them,” says Ntuli.
She says that in addition, by virtue of Yalu being a small, unknown brand, consumers are sceptical of the message, as they expect this education to be coming from the big banking brands.
Ntuli says awareness of this insurance is the big issue as a lot of South Africans are in the dark about credit life insurance. “Some don’t even know whether they have this policy or not, and many are unaware that they have the right to choose their own provider and save money every month in the process,” she said.
Ntuli says credit life insurance covers borrowers against their debt in the case of retrenchment, disability or death. This type of insurance is often mandatory for certain types of debt and is generally offered by the same financial institution offering the loan.
The fees charged for such policies can vary dramatically and as a result, many consumers might find themselves unwittingly paying the maximum possible premium every month, creating room for savings if they were to choose a different provider, she said.
“We have a strong culture of stretching scarce financial resources in our communities, and we need to grow this by making sure our mothers and gogos are aware of the savings re-looking credit life insurance offers. I have no doubt that as families become more aware of what they can achieve financially they will start to take advantage of the opportunity,” said Ntuli.
She says consumers looking to optimise their monthly budget can visit the Yalu website and go through a quick process that allows them to view their credit facilities and understand what they’re likely to save on credit life insurance every month. Ntuli says there are three key things every credit life insurance policyholder should know: how much the policy is costing them, what it covers them for, and how and where they should claim, but this information is not always made easily accessible by all service providers.
“A comparison of premiums over time is also an important consideration. A lot of service providers don’t reduce the policy premium as the loan amount reduces. So, premiums may seem equal right now, but if you compare them over the lifetime of the loan, you’ll find a lot of money that should be in the consumer’s pocket but isn’t. Even though there is clear irony in the fact that South Africa’s communities, famously skilled at stretching monthly income a long, long way, are missing out on hundreds of rands in savings a month,” said Ntuli.
She says the tide is turning and that more women are empowering themselves with knowledge, which is further enabled by the various platforms created in Women’s Month.
“The good news is that awareness around these issues is definitely improving. There are clear actions every household can take to improve their monthly budget, and we can boost awareness particularly well during Women’s Month, when there is a lot of national focus on female empowerment. If we keep pushing for better financial awareness, our matriarchs will improve on the incredible, nurturing work they’ve performed for so many years,” said Ntuli.
Ntuli says that with regards to reaching out to consumers from rural communities, Yalu found that the two most effective methods are face-to-face engagements, which they have done through partnering on events that are hosted in various communities,” says Ntuli.