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The impact of Extended Life insurance Application periods on client welfare

20 May 2024
2 minute read

The traditional process for obtaining a life insurance policy typically involves completing lifestyle and health questionnaires. These questionnaires are then scrutinised by the insurance company's medical assessors, commonly referred to as underwriters, and sometimes even by medical doctors.

Upon reviewing the responses to these health questionnaires, the applicant may be required to undergo medical examinations, which could include various blood tests (commonly, an HIV test is requested in South Africa, among others). The results of these tests are subsequently evaluated by the insurance company's underwriters. In certain instances, additional tests may be requested. Once all the required tests have been completed and analysed satisfactorily, the insurance company extends a policy offer. This entire process typically takes between one month and six weeks.

In contrast, 1Life Insurance streamlines the application process by only necessitating the successful completion of the lifestyle and health questionnaire before issuing a policy. No specific medical tests are required initially. This automated underwriting process enables the company to make an immediate decision to approve or decline the policy, offering a significantly faster turnaround compared to most other life insurance companies. Post-approval, the client is required to undergo an HIV test within three months, ensuring a swift continuation of the life insurance policy application process.

While a one-month delay may seem inconsequential when considering the broader context of obtaining a life insurance policy and the long-term risk protection it provides, the implications of remaining without life cover during that period can be substantial. In South Africa, during an average month*:

  1. Approximately 135 South Africans succumb to respiratory diseases.
  2. Nearly 130 South Africans lose their lives to cancer, some of whom may have been diagnosed late.
  3. Over 120 South Africans pass away due to various cardiovascular diseases such as heart attacks or strokes.
  4. About 16 South Africans die from nervous system-related causes, including brain injuries and tumours.

When considering the above figures one also needs to keep in mind that the average insurance gap for life cover, published by the Association for Savings and Investment South Africa (ASISA) in November 2022, is between R1 million and R1.6 million per earner. Taking just the example of death due to respiratory diseases, this means that each month some 135 families are expected to find themselves with a total financial shortfall of between R135 million and R216 million from the passing of a loved one. And the health conditions listed above are just some of the main causes of death in South Africa each month.

These figures underscore the critical importance of promptly securing life insurance coverage. The potential costs of foregoing life cover, even for just a month, highlight the need for efficient and expedited application processes to safeguard the welfare of clients.

*2022 Census for South Africans between the ages of 35 -45 with at least a matric level education and LSM8-10 Mortality

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