The question about how much ?
How much is enough ? When it comes to life and disability insurance , it seems that South Africans have no idea , or more precisely , their calculations are out by at least R1 million .
By Elvira Wood .
Most South Africans — and graduate professionals specifically — know they should have life and disability insurance in place should something happen to them as income earners . Many of them , therefore , are insured . Still , according to the 2022 Life and Disability Insurance Gap Study released by the Association of Savings and Investments South Africa ( Asisa ) in November 2022 , they are vastly underinsured .
This study , done every three years , shows that at the end of December 2021 , the average South African income earner had a life insurance shortfall of at least R1 million and a disability cover gap of around R1.4 million .
This amounts to an unfathomable total combined insurance shortfall for all South African income earners of R34.4 trillion .
Hennie de Villiers , deputy chair of the Asisa Life and Risk Board Committee , puts this into context by pointing out that the consolidated Government expenditure for 2022 / 23 , as announced in the 2022 Budget , amounts to R2.16 trillion . This means that the insurance gap of R34.3 trillion exceeds the National Budget by around 15 times .
Wake-up call
Many South African income earners might have had a serious “ wake-up ” call in the recent past when the COVID-19 pandemic showed just how vital adequate life and disability insurance is .
De Villiers said that between 1 April 2020 and 31 March 2021 , statistics show that South African insurers received a total of 1 985 303 death claims . Although this is not exclusively for COVID- 19-related deaths , this time period does cover four COVID-19 waves . Life insurers paid out benefits of R120.5 billion to the beneficiaries who submitted these claims .
“ While these payments undoubtedly assisted in easing the financial burden brought about by such a tragic event , the gap study
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