Why aren’t South Africans taking out life cover?

Nomsa’s father passed away when she was in Grade 11 and her family’s lives changed completely in that moment. You see; her father like many parents of African descent back then; did not have life cover. It was not for a lack of desire that he did not have cover in place, but it was due to the lack of exposure to which products were in the market.

“When my father died, he didn’t have life cover in place because we generally haven’t been exposed to those things. Plus, he worked as a general worker, so his company didn’t encourage that kind of thing and he wasn’t earning enough to save. Looking back, you realise that you don’t want your kids to suffer the same fate; you must always prepare for the unfortunate event of death. I know that I may not be the best planner, but my finances always need to be in order.”

Many South Africans today still find themselves in this kind of situation. Although people may have access to equal opportunities there is still a gap in financial education. We spend a lot of time fixated on gaining employment and earning a lot of money but when we finally get there, we are not quite sure what’s next and unfortunately there’s still so much to learn about in terms of managing money. This can be seen when Nomsa speaks about how she put some money in a savings account over sometime but was surprised by how little interest she had earned.

“I remember the first time I saved money, I saved for a year and then when it was time for the investment to mature, I realised that it had only accumulated three hundred Rands. I have never been that disappointed in my life.  I expected double because I didn’t really understand what I was doing, I just thought that if I just save money then I’ll make a lot back by the end of the year.”

A lot of people can relate to this, not only from a savings perspective but also from an insurance perspective. If you are lucky enough to be aware of the importance of having insurance; you take out cover because that’s the right thing to do but sometimes you haven’t quite understood what the market has to offer. You find yourself paying very expensive premiums which can cause financial strain, and this eventually leads to you letting your cover lapse. There’s often a much better deal out there; you just need to find it.

What is the impact on your loved ones?

This not only leaves you vulnerable in the case of critical illness or unexpected disability but if you are to pass on, your dependents will be left to fend for themselves. In Nomsa’s case, what was particularly difficult was her transition from high school to university because there were so many costs attached to this. Her mother had to shoulder the responsibility on her own; which eventually led to Nomsa working while studying. Her mother had to work long hours to make sure that Nomsa received the best opportunities possible. This resulted in her missing out on some precious moments in her life like her ballroom competitions in high school. This affected both of them in different ways, adding strain which could have been avoided had there been life cover in place.

Life cover makes a big difference in the lives of our dependents after we are gone because even if they manage to shoulder the burden, we still want them to live full lives after we are gone. Educating yourself on the financial decisions you are making a huge difference in getting value for your money.