According to research conducted by True South Actuaries & Consultants and the Unisa Bureau of Market Research, South Africans are hopelessly underinsured for death and disability. This is not new research or the first time that this conclusion has been reached. But what is new is that for the first time, at least as far as I can remember, they have actually released the numbers behind the research and as result we can know the number of working South Africans that are likely to die or become disabled in the next year. The research also showed that it is not the low income earners who are most at risk – in fact, consumers earning more than R16 500 are the most likely to leave their families with the biggest financial shortfall when they die or become disabled.
According to the research there are about 12.4 million working South Africans and of these about 52000 are likely to become permanently disabled in the next year. 52000 – that’s 142 per day!!! That’s a lot of people. When you do the maths, however, it amounts to about 0.4% of the working population…so it is statistically unlikely to happen to you (thankfully). But what if it does?
And that’s the question that needs answering.
As the major breadwinner in our household, my disablement would be financially devastating and so that’s why I have insured the risk through some income replacement cover. This, in my opinion is the best way to cover this kind of risk (and the premium is tax deductible). But before you rush out and buy this cover first find out what cover you already have through your company retirement fund or through your existing policies and please don’t cancel any old cover before you have new cover in place.
As far as the death rates are concerned, about 3 times as many working South Africans will die in the next year (160000). Again, you need to consider the financial impact of this on your family and if necessary, you need to take out some more life cover. It is not expensive – but please, stay far away from 1lifedirect and Outsurance Life. I will write more about them next week but their products are exceptionally expensive – despite their advertising “no brokers” and “no commission”.