South Africans are under the impression that life insurance is expensive and not easily accessible.
As a result, a large portion of the population is not insured - a gap estimated to be as high as R30 trillion.
The three main reasons for this gap have been identified as:
1. Lack of disposable income. Many South Africans believe that life insurance is not affordable, yet these same people are usually able to purchase funeral cover. “If we're making the argument around affordability, life insurance is often significantly cheaper than funeral cover when comparing how much cover R1 of premium will buy,” says Sanlam Indie chief executive Peter Castleden. “At the extremes, an individual may be able to get as much as 15 times more life cover for the same premium as funeral cover.”
Life insurance is designed for settling debt, expenses and leaving behind financial security for loved ones. Funeral cover is a quick payout to cover immediate expenses and the cost of the funeral, and that is where it stops. “Some insurers offer a baked-in benefit which pays a portion of the life cover as quickly as funeral cover would pay - effectively killing two birds with one stone,” says Castleden.