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September 27th, 2016 by


According to many leading insurance providers, such as Sanlam and KPMG, over 60% of South Africans are ill-prepared for any major losses in their lives. These include disabilities as well as home, life and funeral insurance.

The Harsh Reality of Over-Indebtedness and Underinsurance

With the rising cost of inflation, consumers have reduced their coverage in a bid to cope with dramatically rising costs. These include transport, electricity, water, food costs as well as the day-to-day cost of living expenses.

According to the National Credit Regulator, over 10.3 million South Africans battle to meet their monthly debt payments. In a declining economy where the cost of living continues to rise, insurance and risk-related expenditure are the first to be cut from a household budget.

debt review

Worryingly, by doing so, George Davis, Divisional Head at Risk Benefit Solutions (RBS) says consumers may actually find themselves in more financial trouble, should the unforeseeable occur.

The latest crime statistics released by the South African Police Services, reveal:

  • A 21% increase in reported household robbery claims (theft by use of force or violence)
  • A 19% decrease in domestic house breaking claims (breaking and entering a property)

In terms of insuring your home, a household robbery could result in a devastating blow to your finances. The cost to replace your personal belongings could be a price many could not afford without the relevant household insurance.

What Does Underinsured Actually Mean?

Underinsured means that, when looking at people’s every day expenses against the insurance they have in place, it is insufficient to ensure they can continue living, should something happen to them.

According to Sanlam Risk Segment manager, Kenosi Magosha, one in two people in South Africa are not even aware of their risk benefits, or the fact that they are underinsured.

Magosha says that the only time consumers take into account their life insurance, disability and medical coverage is when they join, or interview for, a new company and inquire about the benefits.

“When people join a company, there is a lot of information-sharing that takes place and it doesn’t necessarily happen very often thereafter. We are so concerned about how much we are going to earn and take home, at that point in time, that we are not worried about what could happen. It’s a difficult place to have to make all those decisions all at once.”

So, What Should We Be Doing?

Magosha advises asking your HR manager what exactly you and your family are covered for. It is also important to go a step further and find out what exactly your benefits will provide for. Whether it be death, disability, or loss of income, and the amount you will receive for each.

“It is important to do this on a regular basis because life changes,” says Magosha. “You start working, you get married, you have children, you buy a house.”

When buying a house, Magosha says that insurance plays an important part. This is due to the fact that you will have to be insured against the loan you took to buy the house, for the bank to approve a bond.

What Are the Most Important Risk Benefits?

“The most important thing is to form a foundation.”

Income protection and a disability cover are the most important risk benefits. This pays an income to an individual when they become disabled. Income protection should form the basis of your insurance coverage foundation.

“You want to first replace an income and then make sure that everything else follows on top of that.”

Once that is in place you want to make sure that, should something happen to you or you pass away, there is something in place for your dependents. For example, life insurance.

Save When Grouping Your Home and Auto Insurance

Most insurance providers offer the chance to pair your house and car into one insurance package. This often comes at a discounted rate.

But just how much? Some insurance providers suggest you can save as much as 15% but like all insurance. Although it is all based on the individual. See some scenarios below and APPLY NOW to see how much you can save on your monthly premiums. 

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