South Africa’s life insurance problem
Very few South Africans have life insurance, and similar to South Africa’s retirement crisis, this could be a ticking time bomb that leaves thousands of households vulnerable during difficult times.
Head of Life Insurance Marketing at Momentum George Koble referred to a 2022 Financial Sector Conduct Authority (FSCA) report that revealed that only one in ten South Africans have life insurance.
Even fewer individuals have updated their policies to reflect their current needs and those of their dependents.
Koble said this gap leaves families exposed during crises, and it is important for South Africans to understand the importance of adapting life insurance coverage to fit various life stages.
Many South Africans believe life insurance is only needed later in life, but Kolbe said this is not the case.
He explained that it is not just to protect against death but also to protect against income loss due to serious illness, injury and disability.
“Life insurance should evolve with you, ensuring protection from day one through to retirement, regardless of what life throws at you,” he said.
“At every life stage, protecting your ability to earn an income is crucial. Income protection, often overlooked, is vital because your ability to earn is your greatest asset.”
“Without it, financial goals like saving for retirement, paying for your children’s education, or even managing day-to-day living expenses become far more challenging.”
South Africans should structure their life insurance to include income protection. This will ensure that if they are unable to work due to a serious illness or injury, they can continue to support their families and maintain their lifestyles.
“When thinking about life insurance, especially during critical life phases, income protection must be a key part of the plan,” he said.
Kolbe outlined the reasons why you would need life insurance at every stage of life and what this coverage should look like at each stage.
Early adulthood – ages 20 to 30
Kolbe said early adulthood should be used to lay the foundation for future cover.
“In your 20s, you’re likely just starting your career and enjoying new-found independence and laying the groundwork for your future,” he said.
“That means renting your first flat, driving your first car and living life to the full. This is the ideal time to secure affordable life insurance, protecting your income and setting a foundation for future financial success.”
One good reason to start thinking about life insurance at this stage is that it is cheapest when you are young and healthy.
At this stage, South Africans should consider getting income protection and life cover if they have dependants who rely on their income for their financial needs.
The benefits of this are that it will protect your income in the event of serious illness, disability or impairment and ensure your loved ones are provided for in the event of your unexpected demise.
Family planning – ages 30 to 50
“As you enter your 30s and 40s, it is time to start laying down your roots. You may start a family and take on greater financial responsibilities. This is a critical period to ensure your family’s financial security,” Kolbe said.
Life cover is crucial at this stage, where you develop growing financial responsibilities with a spouse or partner, children, and associated expenses, such as buying a house and funding your children’s education.
Therefore, it is important to ensure that your insurance includes income protection, life cover, and protection against critical illnesses.
This will protect your family’s quality of life, cover you against the financial impact of living with a serious illness, disability or impairment and ensure your loved ones are secure.
Retirement planning – ages 50+
“Although you may not be retiring yet, it is likely time to review your financial cover, as you may have fewer dependents, and your focus can move to preserving your retirement income,” he said.
At this stage in life, people generally have fewer dependents and financial responsibilities and can focus on securing their retirement income.
Kolbe suggested South Africans who find themselves at this stage should review their cover, adjust their current cover to meet their needs and plan for the balance of their working career and ultimate retirement.
This will ensure that you and your retirement income are protected in the event of contracting a serious illness and leaving a legacy through proper estate planning.
Advice for every stage
Kolbe said that, regardless of what cover you choose, it is important to review and update it regularly throughout your life.
“Life is full of both expected and unexpected changes. From marriage to children to new homes and retirement plans, everything changes all the time,” he said.
“These significant life events can alter your financial landscape and necessitate adjustments to your life insurance planning.”
He reminded South Africans that life insurance is more than just a safety net – it’s a strategic financial tool that should adapt to you and your family’s changing needs.
“Whether you are starting a family, buying a home, or advancing in your career, it’s vital to regularly reassess your cover to ensure it meets your current circumstances and financial needs.”
“Ultimately, life insurance should evolve alongside your life. Having the right coverage helps you breathe easy, knowing your family’s future is secure.”
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