By Angelique Ruzicka, editor, Justmoney.co.za
There is no such thing as a free lunch – or so the saying goes. But apparently Liberty are keen on offering free life insurance worth R25,000 for up to one year to clients. The catch? It’s only available to a certain type of customer, i.e. newlyweds, new parents and new home-owners.
Liberty claim they are targeting this particular market because they are already inundated with other costs such as ‘decorating a nursery, throwing a house-warming party and because as a spouse, parent and home-owner these people have enough responsibility already.
“Liberty understands – that’s why they are giving away R25 000 worth of free life cover for up to a year to newlyweds, new parents and new home-owners. Free Cover – an innovative, industry-first - helps young adults adjust to these important changes in their lives and to assist them on the start of their journey towards financial freedom,” said the company.
While this sounds like a kind, noble gesture, it may be safe to say that Liberty isn’t exactly putting itself at much risk. While you qualify if you are between the age of 18 and 65, you also only qualify if you are a new parent, new home owner or newlywed. But how many 60 year olds would qualify with those criteria?
Sure, the customers that qualify for this deal won’t be paying any premiums for a year but if this offer is only extended to young people in general (cause statistically they would be more likely to become new parents, get married and buy a house for the first time) the likelihood of a life insurance claim in the space of a year is unlikely. So while the cover is free – Liberty has mitigated the risk of covering older clients who are more likely to die and whose dependents would then claim on their behalf.
But even if you have a child or become a new homeowner recently you may still not qualify. Under Liberty’s terms and conditions it states that: “A new parent is someone who has a child less than 11 months old (or adopted a child less than 11 months ago). A new homeowner is someone whose property registration date or transfer date for their home is less than 11 months old. A newlywed is someone who got married (officially through having a valid marriage certificate) less than 11 months ago.” Traditional marriages do not count.
The life insurance gap
Still – young people are indeed in need of life cover. As Nicholas van der Nest, director of risk product innovation at Liberty explains there is a massive life insurance gap in South Africa, which stands at a staggering R9.3 trillion shortfall. “This is because it is difficult for people to see the real value of life cover as it is an expense that doesn’t yield an immediate return.”
Van der Nest adds: “However, once you have dependents or own a major asset such as a house, you need to think about the financial implications that your death will have on your family. Who will provide for them when you are no longer able to, and will they be stuck with the debt of the bond if you haven’t made provision? This is the true importance of life cover to benefit those who are dependent on you so that they do not have to carry the financial burden in your absence.”
But is this a good deal?
Andre Goethals, manager of credit life, says that it is a good deal as consumers would be relieved of paying premiums, but added: “It should be enough to cover a funeral but won’t be enough to cover the majority of liabilities.”
It’s still a good deal if you were to compare it to some cheap funeral policies available out there such as Old Mutual’s ‘Pay-when you-can’ funeral cover, which asks for a once off premium of R49.95 for R1000 funeral cover for 14 months or R219.95 for R5000 cover for 14 months or Union Life’s funeral policy where you pay R25 per month for R5000.
So if you have been covering yourself and your family with pay as you go or cheap funeral cover then getting one year’s free life cover from Liberty, provided you meet the criteria, would be a welcome respite (for at least a year).
To apply for the free life cover, you simply click here. It will take only two minutes and there’s no health screening, and no need to purchase any other products from Liberty to qualify.