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What Type of Cover Do You Need?

Petrie Marx, 21 January 2019

Asisa’s recent South Africa Insurance Gap Report identified a death insurance gap of about R12.9 trillion in SA, and a disability insurance gap should be R16 trillion. These findings highlight that SA income-earners are underinsured for death and disability by R28.9 trillion.

The dramatic cover deficit has long-term implications for individuals and the country at large and part of the problem, is a lack of understanding regarding which policies are necessary for adequate risk protection. Moreover, many young people find it extremely daunting to decide what kind of cover is important, especially on a starting out salary. This leaves them with a burning question: “So, what cover do I need, and when?”

Petrie Marx, Product Actuary at Sanlam Personal Finance, says there is no universal answer or fits-all approach as each individual has unique circumstances. “We would advise you to do a needs-based analysis – either with a financial adviser or through a ‘robo-advice’ tool like Sanlam Now – to determine what cover best suits your requirements. There are myriad factors to consider, like your existing employee benefits or how to make adequate provision for yourself in the ‘sharing economy’.”

Marx further says that, while each person is different, there is a ‘framework’ for the kinds of cover you need at various stages in your life. “Again, this all depends on your circumstances and long-term financial plan. For example, you may see the benefit of buying risk cover early, while you are still young and healthy, to benefit from a lower cost, even if you don’t necessarily need the cover at that point in time.”

Marx suggests the following framework for the types of insurance you need at different life stages:


  • The risk of your family ‘inheriting’ your student loan debt. Solution: death cover.
  • The risk of a serious injury. According to the World Health Organisation, road accidents kill someone every 24 seconds, and are the leading killer of young people (ages 5 to 29). Another report from the International Transport Forum found distractions mean that young people between the ages of 18 to 24 are twice as likely to be involved in a singular vehicle crash than individuals aged 25 to 49. So, accident cover is highly advisable.

Young, Single and Just Starting out Professionally

  • Burdening your family with any debts you incur (student loans, car, etc.): Solution: death cover.
  • The risk of losing your ability to earn an income. Think about it. You have 45 earning years ahead of you (or more as many people don’t retire at age 65), so what happens if you suddenly become disabled? The most important kinds of cover you need are income protection and disability cover.
  • The risk of paying more, later. A top tip is to consider putting some additional life insurance in place, as it’s at its most affordable now, when you’re young and healthy.

In a Serious Relationship and Considering Buying a First Home

The same as with young adults, but also focus on protecting yourself – and your partner – from debt: co-signed debt or short-term like credit cards and personal loans. Consider credit life insurance and some additional death cover.

Have a Young Family or Considering Having Kids

  • If you are dependent on two income streams, there’s the risk of losing an income should one partner pass away, rendering your family unable to support its current lifestyle. Solution: death cover and sufficient income protection, as well as disability cover. Death cover is the best way to ensure your young children are provided for and can access quality education.
  • The risk of burdening your family with debt. Solution: death cover.

Peak Professional Years

  • Health risks, like cancer and heart disease. Solution: severe illness cover.
  • The risk of your loved ones hastily having to sell the assets you’ve worked so hard to build up to pay for any final expenses and settle estate costs, should you pass away. Solution: death cover.
  • Your life insurance needs may change as your children become more financially independent and you start to pay off your mortgage. Check in with your financial adviser.
  • Ensure you still have sufficient income protection and disability cover.

Living Your Best Retirement Years

  • Although you might have paid off most of your debts, death cover is still the best way to protect your family from any outstanding debt.
  • The costs of winding up an estate, in the form of estate duties or executor’s fees, can be substantial for your loved ones. Solution: death cover.
  • There’s also the risk of your family paying for your funeral. Solution: funeral cover.
  • Plus, the risk of your spouse losing a substantial portion of your pension, should you pass away. Solution: death cover, as life insurance can replace such an income loss to ensure your partner can maintain their current lifestyle.
  • Finally, there’s the risk of serious, life changing-events like cancer or Alzheimer’s, which could require long-term care. Solution: severe illness cover.

Marx concludes that this is just a guideline and says it is highly advisable to consult a financial adviser and go through the process of doing a needs-based analysis.

Sanlam Life Insurance is a licensed financial service provider.
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