IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconFinancial Planners
IconLife Insurance Companies
IconLife Insurance Products
IconOnline Quotes
IconPublic Loss Adjustors
IconRe-insurance Companies
IconRegulatory Authorities
IconSocial Grants (Government)
IconWellness Programs
Advertise Here
  Subscribe To »

Survey reveals South African’s aren’t protecting their income






In spite of this, less than 50% of the people surveyed by FMI (a division of Bidvest Life Limited) in their recent #RealityCheck consumer survey believe they will have a temporary injury in their working lifetimes, and do not have any form of Income Protection or Disability cover.
The effects of not earning an income for 3 months would be devastating to most South Africans, the survey found:
  • Without an income, two-thirds of respondents said they would run out of money within 3 months;
  • Almost 1 in 5 said their house and assets would be repossessed, while 1 in 7 would no longer be able to pay school fees;
  • In the worst-case scenario 1 in 7 business-owners and self-employed respondents said they would lose their business without an income;
  • In total, over a third (33%) of the respondents would experience catastrophic results such as losing their homes without an income for longer than 3 months.
“South Africans grossly underestimate the risk of temporary illness or injury – and conversely, overestimate the risk of permanent disability, critical illness or death,” said FMI’s CEO Brad Toerien. “Half of the people we surveyed see life insurance as only ‘death cover’. The result is that people are twice as likely to buy Life cover over Disability cover, potentially leaving themselves without income insurance when an illness or injury strikes.”
What this means is that many people are uninsured because they don’t see the need for life insurance, and many have Life cover, when what they actually need is Income Protection. Compounding the problem, is that the vast majority of Disability cover (77%)* currently sold in South Africa is Lump Sum cover, as opposed to Income benefits. However, given a choice, 61% of survey respondents would choose a monthly income pay-out over a once-off lump sum.
“The challenge with a lump sum pay-out is that it’s impossible to know how much cover you need when you buy your policy, and there are clear investment, longevity and inflationary risks,” explains Toerien. “While they’re great to settle debts or once-off expenses, we don’t believe they should be used to provide an ongoing monthly income. Income benefits are easier to understand and plan for because they mimic the income stream you are trying to replace.
“And, human nature being what it is, there’s a very real behavioural risk of receiving a lump sum. With monthly Income benefits that simply replace your salary, you won’t be tempted to spend it on expensive cars and luxury holidays, instead of looking after your family’s immediate and future needs.”
South Africans also underestimate how much their total future income is worth, the survey suggests. More than half (51%) of respondents estimated they would earn no more than R10-million during their lifetime. In reality, a 25-year-old earning R15 000 a month will earn around R28-million during their working lives (based on a 6% annual salary growth, assuming retirement at age 65).
“The bottom line: your income enables your lifestyle and your future dreams, and is core to you and your family’s financial future. You can’t live without it. In today’s economy, we should be aware of the risks, and do more to protect our income,” concludes Toerien.

*Source: FMI Disability Cover Study (2018) 
Source: ByDesign Communications
« Back to previous page Print this page » |

Breaking News »

1Life launches 1Life Vantage

1Life announced the launch of their new digital intermediary solution for life and investment financial advisors – 1Life Vantage - aimed at enabling financial advisers to provide superior financial planning, ...
Read More »


Introducing Our New Website!

The Insurance Gateway® team is excited to share our new website with you. Given our strategic objectives for 2019 and the fact that our last website redesign was over five years ago, we decided on a much anticipated ...
Read More »


FSCA appoint the new Divisional Executive for Conduct of Business Supervision

FSCA commissioner, Mr Abel Sithole has appointed Ms. Kedibone Dikokwe as the Divisional Executive: Conduct of Business Supervision, effective from 1 July 2019. This is the division that supervises the way financial ...
Read More »


Funeral cover leads insurance uptake, but are millennials bucking the trend?

          Vera Nagtegaal, the Executive Head of Hippo. co. za.                   In South Africa, burying a loved ...
Read More »


More News »


Healthcare »


Investment »


Retirement »


Short-term »

Advertise Here
Advertise Here

From The Glossary »



The actual annual interest payment on a bond, gilt, promissory note or other fixed income security. (usually paid six-monthly).
More Definitions »






Contact IG


Media Pack


RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2019. All Rights Reserved.