Life cover for the low income market still in demand

Metropolitan launches medical-test free life cover, which could be a game-changer in the lower end of the market

South Africans are underinsured by, on average, R600 000 in the event of death (Insurance Gap Study 2010). While there has been a small improvement in the take up of risk cover overall during 2011 there is still a significant gap and many people still require additional life insurance.

Risk insurance, especially funeral cover, but to a lesser extent life cover and income protection, has continuously proven to be the more popular amongst the low income market. The barrier to applying for risk insurance appears to be the need to submit medical tests to qualify for this insurance.

Metropolitan announced the launch of the FutureBuilder Life Cover up to R500000, without the need for any medical tests. This is the highest level of cover available in South Africa today that does not require medical tests.

Quintin Augustine, Product Development Manager at Metropolitan says, while risk cover in the form of funeral is the most important cover South Africans consider, the use of long term insurance overall has declined by 7% from 2010 to 2011 according to a study conducted by FinScope in 2011. “In comparison to funeral cover, the take-up of life cover is still relatively low in the low to middle income markets. Metropolitan is continuously seeking ways to make long-term insurance more accessible to our market by providing market appropriate solutions such as the FutureBuilder Life Cover product,” says Augustine.

Augustine adds, “Regardless of income level, all heads of households aspire to leave a legacy when they are no longer around. Although many do this by ensuring enough money for a funeral, there is still a need for life cover to help the family left behind settle debt, continue the education of their children or afford the lifestyle they want to maintain.

“But applying for life cover can be difficult in that policyholders are required to submit to medical tests before their application can be approved. In addition to that hurdle, we live in a country where the majority of the population is struggling financially, struggling to understand financial products on offer and where illness such as HIV/Aids has become a daily part of our lives.”

Augustine says Metropolitan has done considerable research into the needs of the market and through product innovation wants to respond to the needs of lower income households and promote easy access to financial services products. He says this is essential for Metropolitan to remain relevant in this market.

Metropolitan have added extra valuable benefits, such as the Terminal Illness benefit, which will pay up to 50% of the benefit amount to the insured before they die and the Free Cover benefit that will provide free cover for 45 days from the time the policy application has been approved, even if the first premium has not been paid yet. In addition, the customer can choose to add a cash back benefit to this policy, which will return a portion of the premiums paid if the customer remains loyal for a specified term.