Life Insurance remains a real solution for ordinary South Africans towards attaining financial freedom, says Jannie Venter, Managing Executive for Absa Life. South Africans last week celebrated Freedom Day and most recently International Workers Day. Many
A study done by the Association of Savings and Investments South Africa (ASISA) disclosed that in 2011 alone, “the Life Industry in South Africa paid out more than R216.7-billion in benefits to policyholders, beneficiaries and pension fund members as a result of death and disability claims, maturity payouts and pension, and other payments.” Of these benefits, R17.3 billion was paid to the beneficiaries of deceased individual policyholders. “That is a tangible rand amount paid to ensure the living standards of individuals continue and proves that the life industry has a crucial role to play to help individuals attain financial freedom”, added Venter. Absa Life is a significant contributor to these benefits, with just under R500m of death benefits paid in 2011.
Venter however admits that many South Africans face challenges. The life and disability gap study commission by ASISA found South African income earners are under insured by R18.4 trillion. This is exacerbated by the low savings rate in SA (16% of GDP in 2009, as compared to our BRIC counterparts China’s 52%, India 37% and Russia of 22%) and the widely quoted statistic that only one in 10 South Africans can retire comfortably.
Venter nevertheless believes the insurance industry in South Africa has made huge progress in recent years. “High access to mobile phones and developed banking distribution branches means financial institutions like Absa can have regular contact with their customers and recommend appropriate life policies to ensure continuity. Solutions can range from basic funeral cover, simple life insurance without any medical assessments to advice driven individual and business assurance”, added Venter.
He also urged South Africans to start with a simple check list to ensure that debt is protected by life cover, whether it is car loan, home loan, overdraft and personal loans or business loans.
“It may also be an opportune time to reflect on how financially free you are as an individual.
Get the latest issue of FAnews