Cape Town - South Africans are living longer and this leads to the important question of whether they are financially prepared for this greater life expectancy.
A recent statistics guide released by Old Mutual showed that R2.8bn in claims was paid to the group’s retail customers in 2012.
This was made up of:
- Death claims - 78%
- Illness and physical impairment claims – 12%
- Disability claims – 10%
- Retrenchment claims – less than 1%
These statistics show that people are not expecting to live through life’s unforeseen circumstances.
The importance of ensuring adequate cover for life occurrences can be illustrated as follows:
At age 20, you start earning R10 000 per month. If you only consider a 6% inflation and not other factors such as bonuses or promotions, by the time you are 65, you would have earned just under R28m. Add a further 2% and that number almost doubles to just over R50m.
“These statistics show us that people are not expecting to live through life’s unforeseen circumstances,” according to Jaco Gouws, risk product manager at Old Mutual.
“We are all aware of modern medicine and that there are more treatments available to humans, yet we all mostly plan for death. We tend to overlook the high likelihood that we will experience temporary or permanent disability, a severe illness such as cancer; or a retrenchment before we actually pass away.”
According to research done by True South Accountants and Actuaries in March this year, 60% of South Africans are underinsured for permanent disability and a staggering 93% are underinsured for temporary disability.
“Life happens,” said Gouws.”And when it does, it could have serious financial implications for our families.
"Disability and severe illness solutions are an important part of a financial plan as they will help you pay for the costs your medical aid can’t cover, allow you to take some much needed time off work to recover, pay for a caregiver or settle a medical debt.”