South Africans are under insured

By Staff Writer

South Africans are significantly under insured for death and disabilities, said the Association for Savings and Investment SA (Asisa) on Wednesday.

South Africans are "on average... underinsured by 62% for death and 60% for disability," said Asisa deputy CEO Peter Dempsey.

In the next year about 160 000 income earners are expected to die, while about 52 000 will suffer total and permanent disability.

"This means that in addition to grappling with the loss of these income earners, more than 212 000 families will face unexpected financial hardship next year brought about by South Africa's massive life and disability insurance gap."


This was according to research by True South Actuaries & Consultants and the Unisa Bureau of Market Research.


Asisa said an independent study to measure the shortfall in 2007 found that South African earners were underinsured by about R10 trillion.


Dempsey said the 2010 Life and Disability Insurance Gap Study showed that South Africa's 12.4 million income earners between the ages of 16 and 65 were underinsured by R18.4 trillion.

The death insurance gap was R7.3 trillion, and the disability insurance gap R11.1 trillion.

The insurance gap was defined as the difference between the insurance need and the actual cover.

"Given the fact that it was possible to interrogate data in much greater detail this year and factoring in the growth in earnings over the past three years since the last study was conducted, we conclude that the insurance gap has not necessarily widened," said Dempsey.


"What this means is that consumers did not rush out and increase their levels of life and disability insurance since the last study was done in 2007.


"This is understandable, given the global financial crisis and the recession that followed. But this also means that people held on to the life and disability protection cover they had."


Higher income earners were the most likely to be underinsured.


"Our research shows that consumers earning more than R16 700 a month will leave their families with the biggest financial shortfall when they die or become disabled.


"The higher an earner's income bracket, the more life cover is required to maintain living standards."


High income earners older than 55 were the only group with sufficient life cover, as they had generally saved enough money. They might also have benefited from group life cover through years of membership of an employer's pension fund.

 

Recent Articles

Featured Register your customary marriage or lose the right to inherit estate

December is that time of the year when we will see at least one suitor sending his uncles to negotiate the price of his future wife. Lobola, as the bride price is known, has always been an important element of the African marriage.

Read more

Changing from one medical scheme to another - effortlessly

It is coming up to the end of the year and you might be looking to change medical schemes, or options within a scheme in preparation for the new year. While you don’t necessarily have to wait for year-end to do so, providers often recommend it.

Read more

Your guide to financially surviving Christmas

There are a few times each year where you need to dig deeper into your pocket and spend more money such as birthdays, anniversaries, and the Christmas period. Whether you celebrate this religious holiday or not, the festive period - depending on how you choose to spend it - means increased travelling, buying of gifts, entertaining, and eating out at restaurants.


Read more

Trump, Trump and a little bit of South Africa

What a November we had, with the rand staging one of its best months and closing below the R14.00 level. To be honest, this looked like quite a far-fetched possibility at one stage during the month. It seems that the tide has changed a little, even though it might be short lived since the US dollar bulls are not so sure of their case anymore.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Free iCollege Scholarship

Price: R600
When: Until 16 May 2019
Where: Nationwide

Telkom December Big Deal

Price: R459 pm
When: Until 31 December
Where: Nationwide

Money Savvy Kids Giveaway

Price: R450
When: 8 December
Where: Johannesburg (Milpark)