South Africa has just come through its first-ever slew of public holidays while in national lockdown. Although most South Africans believe the run ends with Worker’s Day on 1 May, there is one another lesser-known honorary mention to mention.
2 May is Life Insurance Day, a fitting occasion for the country’s current mood. International Coronavirus-related headlines have reminded us all that life is fleeting – and few things protect our families and livelihoods from this fact like life insurance. Life insurance ‘birthday’ first came about when life insurance became available in the USA during the 1700’s and was honoured for its huge contribution to the welfare of destitute widows and orphans.
The history behind Life Insurance Day
That was in 1759, when it wasn’t uncommon to pass on unexpectedly or young - a more unpredictable time than the 21st century, right? Until now, that is. The COVID-19 Pandemic seems to have cured an entire generation of the idea that modern living means no surprises. Many South Africans watching the terrifying death tolls overseas and the economic forecasts locally are rethinking life insurance. It seems that, overnight, the pandemic has reminded us that you never know when it’s your time.
“The average South African is only protected for 36% of their debt, funeral costs and loved ones’ needs for when they pass on.”
Local life insurance: a bleak picture
This is a critical warning for South Africa, a country in which the ability to save is extremely low and where the vast majority do not have sufficient (or any) life insurance. In October last year, an Association for Savings and Investment South Africa (ASISA) study found that “if South African households wanted to maintain their standards of living after a death event, the insurance need for all earners combined is in the region of R20.2 trillion [yet] the extent of actual cover in force in the economy only amounts to R7.4 trillion.”
That’s R12.8 trillion shortfall for a benefit that takes care of debt, can pay for your children’s education, for your house or for any other expenses and often even for funeral expenses. This means the average South African earner is only protected for 36% of their debt, funeral costs and loved ones’ needs, for when breadwinners pass on.
This is despite the fact that South Africans have USD154.5 billion debt and that South African’s life expectancy rate is just 61 to 67 years old (more than a decade less than America and over 15 years behind Italy, two countries with the most COVID-19 deaths currently).
A lack of logic – and protection
It seems illogical – and many are now seeing life insurance for the peace of mind that it is. A MiWayLife policy, for example, means that you still get extensive funeral cover for you and your extended family, but you also get life cover which can be used for expenses which may appear years after your funeral. Paying for children to attend school, settling your debts so your family don’t have to and completing payments for the house you bought are all examples of how life insurance can cover you.
The time is now
“What is interesting about this time is that livelihoods are being threatened to the same or even greater degree than lives,” says Craig Baker, CEO of MiWayLife insurance. “This will mean that some people will be unable to make up the asset losses that would otherwise have catered for the family’s needs once they were no longer around. So, where your prudent approach may have meant that previously you didn’t fall into the category that had a shortfall of cover – yet COVID-19 has changed things. Now might be a good time to re-assess that.”
With national lockdown being phased out, yet COVID-19 tolls only expected to reach their worst sometime around September according to experts, now is the perfect time to make sure you are covered for anything unexpected. Life insurance cover, for only a few hundred rand a month, means hundreds of thousands of rands in protection for you, your loved ones and extended family in the eventuality of a life-threatening illness or death.
“We can of course simply rely on the fact that our population is on average significantly younger than Italy or the USA, we have some sort of immunity benefit that we have not seen anywhere else in the world or any of the other arguments that have been raised. Still, it is highly likely that by the time this has all subsided all of us will know someone very close to us that has passed on and by then it is simply too late,” adds Baker.
So, why not celebrate life with life insurance on this auspicious day? After all, life is too short not to take care of you and yours. And if there’s anything the global COVID-19 pandemic has taught us, it’s that nobody knows what will happen tomorrow.
Get the latest issue of FAnews