INSURANCE: Life And Disability Insurance Shortfall Grow
Recent Western Cape Business News
In short, the 2010 report shows a R4.3 trillion growth in the size of the life cover shortfall along with a R6 trillion increase in the size of the disability cover gap – in just two years.
“The 2010 figures show that little has been taken to heart in spite of the life insurance industry going out of its way to way to point out how unprepared South African families were for the death or disability of breadwinners in 2008” says Mark Lapedus, Head of Retail, Alexander Forbes Life.
To understand this ongoing life and disability shortfall better it is useful to divide South African’s into three groups when it comes to death and disability cover; employed people with company-provided cover, employed people without company-provided cover, and the unemployed.
While those with no cover are obviously underinsured, even those with existing cover, either their own or employer-provided, are also substantially under insured.
So, “even those lucky enough to be employed and provided with some sort of death and disability cover still need to take personal responsibility for what will inevitably be the large shortfall between what their company benefits provide and what they actually need” explains Lapedus.
Yet in spite of these realities numbers show that even this group remains naively confident that whatever benefits their company scheme provides will sort them and their family out in the event of tragedy, even though most employer schemes only provide 50-60% of total salary in the event of disability - and two to five years’ salary in the event of death.
As such Lapedus warns that even if you are lucky enough to have a company scheme “this will only provide the minimum, or the first part, of the death and disability cover that each employee needs. This will then need to be augmented according to each individuals particular needs.”
If you are single without dependents your company scheme might just suffice for death cover, but in the event of disability you will still need additional protection.
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