South Africans Lack Sufficient Long Term Insurance

May 16 - South Africans who believe that they have sufficient coverage in the case of death or disability should check their policies again, warn the experts.

According to the latest Insurance Gap Study which examines long term insurance shortfalls in the South African market, it is estimated that should a family lose its main breadwinner in today's economic situation, it would need to halve its monthly expenses in order to survive.

"We knew that South Africans are underinsured when it comes to death and disability cover," said Gerhard Joubert, chief executive officer of the Life Offices Association, "but until we were presented with the final outcome of this study, we did not realize the extent of the insurance gap in this country."

Joubert explained the unfortunate scenario of a family needing to cut its living expenses in half in case of death of disability. "Unfortunately, this often involves selling the family home, because bond repayments can no longer be met," he said. "And children often have to give up their hopes for a decent tertiary education."

The gap for families which earned under R3800 a year is the largest, according to long term insurance professionals. This is the reason why the Financial Sector Charter Council has been working so hard to to push the low cost long term insurance Zimele product line, to ensure that the majority of South Africans enjoy some type of coverage.

Disability cover reflected very much the same situation, according to the study.

It is estimated that South Africans would need to pay between R1330 and R2322 extra a year in order to close their insurance gaps.