A day to reflect on financial protection and stability

Wimpie Mouton, CEO: Life Solutions at Professional Provident Society

Gareth Friedlander, Deputy CEO of Discovery Life

Clyde Parsons, Chief Innovation Officer at BrightRock

Reuben Oosthuysen, Customer Engagement Manager at Hollard Life Solutions

May 2nd is National Life Insurance Day, commemorating the milestone when life insurance first became accessible in the U.S. The observance also brings awareness of the benefits of life insurance.

FAnews chatted to a few life insurers about the significance of this day and how it helps raise awareness about the importance of life insurance.

The value of life insurance

Insurance, particularly life insurance contributes profound value to individuals, families, and society, according to Wimpie Mouton, CEO: Life Solutions at Professional Provident Society. “Insurance, in essence, is about preparing for and hedging against the uncertainties and risks that life presents. It provides a safety net to mitigate risks and effectively plan for financial security and peace of mind.”

Gareth Friedlander, Deputy CEO of Discovery Life said, “National Life Insurance Day provides us with an opportunity to reflect on our core purpose to make people healthier and to enhance and protect their lives. It is a day where we can pause and recognise the pivotal role that life insurance plays in providing security, peace of mind, and stability during life's most challenging moments, as we reflect on the significance of its creation by increasing awareness around what life insurance can do for clients and their families.”

Clyde Parsons, Chief Innovation Officer at BrightRock mentioned that at BrightRock, they welcome initiatives like these, which seek to educate people about the importance and value of insurance. 

Reuben Oosthuysen, Customer Engagement Manager at Hollard Life Solutions added that National Life Insurance Day serves as an important day and opportunity to have vitally important conversations around financial literacy in general in South Africa, how we engage with insurance as a financial tool and, specifically, the relationships many South Africans have (and do not have) with life insurance.

There are still significant gaps

“According to ASISA, just last year, the life insurance industry paid out more than R599 billion to beneficiaries in South Africa, demonstrating the importance and value of life insurance,” added Parsons.

Mouton added, however, that “we also recognise that there are still significant gaps and uncertainties that need to be addressed, particularly in underrepresented communities. One of the key solutions to addressing these gaps is through education and awareness to empower individuals to make informed decisions about their financial futures.”

Raising awareness

“Research shows that there is a lack of financial literacy regarding insurance among some South Africans, resulting in some policyholders over-insuring their policies and others underinsuring. Statistics from research company Qantam Risk Assessment show that 79.4% of South Africans are underinsured by 51.9% of the value of their possessions, while 20.6% are overinsured by 27.9%. Now this is a concern, as this shows a clear lack of financial literacy around insurance. Specific to life insurance, research from the Financial Sector Conduct Authority (FSCA) shows us that only around 10% of South Africans have life insurance in place. This is a concern as this would suggest the majority of South Africans are underinsured and exposed to significant financial risk,” said Oosthuysen.

“National Life Insurance Day needs to be about informing and raising awareness around the importance of and need for life, critical illness and disability cover. In addition, the calendar date could be used to encourage South Africans to consider their needs and those of their families, to engage with an insurer or financial adviser in order to understand what type of insurance products or services could ultimately protect them from financial shock. Secondly, for those South Africans who may already have life insurance in place, recognition of the day could serve as a reminder to revisit your policies and ensure that this still meets your needs as best as possible,” added Oosthuysen.

“There is work that needs to be done in addressing some of the misconceptions around life insurance in South Africa, such as a belief that having a funeral policy would be sufficient and, life insurance is only for older people (specifically with children) when in reality, it is recommended that it may be the best time to take out life insurance while we are still young and healthy. There are also misconceptions that life insurance is always very expensive and only available for high-earning consumers, as well as the misconception that we cannot purchase life insurance if we have already been diagnosed with an illness or condition. This can be an opportune time to enhance communication to provide accurate information to empower people to make more informed decisions about the right cover,” he continued.

Friedlander added that it is so important to educate South Africans about the importance of protecting their loved ones against unforeseen circumstances, particularly when considering the significant insurance gap that exists today. “According to the 2022 ASISA Life and Disability Insurance Gap Study, South Africa’s 14.3 million income-earners had only enough life and disability insurance to cover 45% of the total insurance needs of their households. National Life Insurance Day allows us to raise awareness about the critical role life insurance plays.”

Mouton added that while financial security is undoubtedly a crucial aspect, their focus extends far beyond that. “We firmly believe that understanding one's income and its implications is paramount in making informed decisions about life insurance, savings and investments and overall financial planning. One of the key ways we contribute to raising awareness is through our comprehensive approach to financial education and preparedness. We actively engage with individuals, including students, on campuses to provide them with essential tools and knowledge about financial planning.”

“Moreover, we recognise the importance of cultivating tomorrow's professionals who are not only aware of the significance of life insurance but also equipped with the necessary skills for financial literacy,” he added.

Protecting loved ones and assets

“Ultimately, our most valuable asset is our ability to work and earn an income and to provide for ourselves and our dependents and families. Life insurance is intended to act as a tool to protect us and our loved ones from financial shock as a result of death or loss of income as a result of a critical illness or incurring a disability,” said Oosthuysen.

Parsons added that “We buy insurance to protect our most valuable assets. When you think about it, we pay for all our assets with our salaries. The value of our remaining salaries and our ability to earn them for our families is our single most valuable asset.”

“Clients should consider if they have enough life insurance to cover this asset in the unfortunate event of a death or disability. Properly structured life insurance policies can provide essential payouts should the life insured suffer a serious illness or injury, or should they pass away. This enables clients and their dependants to continue living the same lifestyle and pay for any adjustments they might need because of the illness or injury,” he concluded.     

In his concluding remarks, Friedlander said, “on National Life Insurance Day, we encourage everyone to consider their current financial situation and future goals. It's essential to recognise that life cover needs are not static, as clients move through each stage of their lives and as their lifestyles or circumstances change, their life cover needs can (and likely will) also change over time. They must understand that the decisions they make when they initially take out life cover policies are not set in stone. Death, illness, disability and income protection cover can be updated over time to account for these changing circumstances and to ensure that life cover remains relevant to their stage of life. With life's unpredictability in mind, it's crucial to ensure that your clients’ cover remains tailored to their unique needs.”

In his concluding remarks, Mouton said, “It's crucial to understand that insurance is not just about individual security - it extends far beyond that to the well-being and future sustainability of our families. Life insurance is the cornerstone of financial planning, offering a vital safety net for individuals and those we hold dear. By securing life insurance, an individual invests in sponsoring the well-being and security of future generations, leaving behind a legacy that reflects what matters most to us.”

Writer’s thoughts

National Life Insurance Day reminds us that life insurance is more than just a policy; it's a commitment to safeguarding people. National Life Insurance Day is also a celebration of the unsung heroes within the insurance industry who dedicate their careers to ensuring families are protected. These professionals don't just sell policies; they offer guidance, support, and reassurance in times of uncertainty. Please comment below, interact with us on X at @fanews_online or email me your thoughts.