Life insurance should be viewed as a tool to stop the cycles of pervasive poverty that exists in South Africa, says Standard Bank Insurance Brokers.
Sonja Oosthuizen, Head of Life Products at Standard Bank Insurance Brokers says policies that pay out in the event of death or disability, are mostly considered a luxury, and features low on the priority list of many South Africans who have historically been financially challenged.
Many families are left unprotected against the negative consequences of adverse life-changing events as only one out of 10 South African consumers have life insurance, excluding funeral insurance. Additionally, a 2019 Insurance Gap Report by the Association for Savings and Investments South Africa (Asisa) calculated that South Africans have a total life insurance shortfall of R34.7 trillion and the South African earner has, on average, just R600 000 of life cover.
“Considering these stats, it would be safe to assume that the most vulnerable remain exposed to the perpetual cycle of poverty. Ironically, life insurance can be used to contribute positively to the alleviation of intergenerational poverty that has been experienced by many South Africans,” explains Oosthuizen.
“Life insurance products can ensure families are protected, and not left vulnerable, in the event that the household breadwinner dies or declared disabled and unable to work. However, a lack of financial literacy, accessibility and affordability remain barriers to the uptake of life insurance products.”
Currently, many South Africans are experiencing financial distress, highlighted by the large number of pension members who have submitted withdrawal applications to access a portion of their savings following the implementation of the two-pot retirement system.
In the context of a constrained economy, high unemployment rates, and ongoing job losses, consumers are compelled to reduce their monthly expenditures, often placing life insurance as least important when budgeting for daily needs.
Despite these challenges, Oosthuizen has an optimistic outlook for South Africa’s life insurance market and believes the insurance industry is well positioned to help eradicate pockets of financial deprivation in previously disadvantaged communities.
“While the insurance gap remains significant, data reveals that there is an entrenched culture amongst South Africans of insuring loved ones through informal society schemes. However, in this regard, higher value is placed on funeral insurance,” adds Oosthuizen.
According to the Funeral Services and Related Activities Industry report, there has been a rise in socially funded benefits and schemes among South Africans and in 2023, consumers purchased 9.97 million new individual recurring premium risk policies, including 5.59 million funeral policies. Additionally, the funeral insurance market is highly competitive and has proven to be quite profitable. In 2022, the sector comprised 15,000 funeral parlours and generated R10 billion in revenue.
“This is a clear indication that in order to cultivate a culture around life insurance akin to that of funeral cover, there is an urgent need for enhanced consumer insurance education. Let’s change the mindset from just thinking about funeral costs and more about the legacy they can leave for their loved ones if something happened to them.
“Life insurance offers families the opportunity to break generational boundaries and the ability to leave the next generation in a better place,” concludes Oosthuizen.
Five things to know about Standard Bank Flexible Life Plan: It’s affordable, simple, accessible and has additional benefits.
Standard Bank’s flexible approach to life insurance gives clients the choice on how they wish to be insured, from amount of coverage required, to opting inflation protection and premium and cover amounts. Clients can adjust cover at any time during the life of the policy, as circumstances or earnings change, keeping cover affordable.
The Standard Bank Flexible Life Plan offers simplicity and no medical examinations are needed. Once the first premium is paid, cover starts immediately with an option to choose up to five beneficiaries to receive benefit payouts.
Standard Bank’s Flexible Life Plan can be purchased online on the Standard Bank Insurance website; via the Standard Bank Insurance Brokers call centre; through the Standard Bank App or at any Standard Bank branch.
You can also choose whether you would like to receive a Cashback every five years where a percentage of premiums paid can be repaid, provided policy premiums are up to date.
In the event of death, the family can use part of benefit amount to cover immediate expenses like funeral costs. A portion of life cover benefit up to a maximum of R100 000) will be paid out within 48 hours after receipt of claim documents.
Clients can opt for the Flexible Funeral Plan which allows them to cover an unlimited number of family members on one policy.
