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.