Enough of old-fashioned ‘death insurance’ and lump-sum cover. It’s time for the South African insurance industry to set a new standard for life insurance. If life insurers really want to protect their clients, the best place to start is with a benefit that will pay an income when temporary injury or illness strikes.
In fact, the traditional approach of insuring South Africans against death and permanent disability, with lump sum benefits, is not only outdated - it’s dangerously misguided.
According to our claims statistics, the average South African in their 30s has a 91% chance of having a temporary disability - and a 37% chance of experiencing a critical illness - before the age of 70. And when that happens, two thirds of South Africans are likely to run out of money within three months of losing their income1.
Contrary to popular belief, the most likely risk we face throughout our lives, is not death, it’s losing the ability to earn an income due to a temporary injury or illness. That’s why the best approach is to first protect 100% of your hard-earned, monthly income – first, before insuring anything else - against what’s most likely to happen, which are the risks of temporary injury, illness, and critical illnesses.
That’s why we talk about ‘Income First’. We’ve got to change the conversation from ‘protecting your life’ to ‘protecting the income you haven’t even had a chance to earn yet’. There is no asset more valuable than your ability to earn an income – and right now, income protection is the biggest gap in most people’s financial plans.
Many South Africans believe that as income earners, their sick leave and Group cover will be sufficient to support them in times of injury or illness. They’re wrong. The reality is that most schemes have a waiting period of three months or more – and almost 90% of the claims FMI paid in 2018 were for less than 90 days. This means that 9 times out of 10, the average employee who thinks they’re fully protected, wouldn’t even qualify for a claim on a typical Group scheme.
At FMI, our philosophy is simple. First, start by protecting 100% of your monthly income against injury, illness and death with income benefits. Only then should you choose Lump Sum benefits to provide for additional expenses. Choosing to insure your income should be your most important insurance. Why? Because it means you’re protecting the future income you are yet to earn, and can continue building your life and making an impact on those around you.
1FMI’s 2018 #RealityCheck consumer survey