A recent survey conducted by FinScope, a nationally representative study of consumers' perceptions on financial services and issues, found that the number of South Africans with life insurance has decreased from 13% in 2005 to 10% at the end of 2006. The survey also found that insurance penetration levels remain extremely low in the LSM 1-5 population and only 4% have formal life assurance cover.
According to the survey, 31% of South Africans don't understand how life insurance companies work and 28% say that 'you cannot get money from them immediately when you need it.' In addition, the survey found that 21% of people expressed an interest for more information or education about life cover.
Lenerd Louw, CEO of 1Lifedirect says that the fact that the number of South Africans taking out life insurance is decreasing is 'alarming' and 'unacceptable'.
Life insurance is an absolute necessity, not only for peace of mind, but as a means of protecting the financial security of your family, and making sure they are safeguarded in the untimely event of your death. Everyone in South Africa, regardless of how much income they earn, should have a life insurance policy in place and if lack of understanding is the main obstacle to achieving a greater take up, then the life insurance industry should follow our lead and place consumer education as its first priority."
1Lifedirect recently embarked on a lower-income market awareness drive at shopping centres in Jubulani, Southgate, Kempton Park and Randburg. During this initiative, 1Lifedirect held interactive workshops which explained the benefits of life insurance and that purchasing life insurance does not have to be daunting, confusing or expensive.
The response to date has been incredible and we have received valuable feedback from those who participated in the workshops. It's clear that assumptions and perceptions about the life insurance industry can be changed and that through awareness empowerment can be gained," says Louw.
Another area where the traditional life insurers can improve on in terms of education and information is improving their selling processes and simplifying their overly-complicated product offerings. We believe that life insurance is perceived as being off-putting and expensive and it doesn't have to be. In fact, when we launched last year we based our entire value proposition on simplicity to try and eradicate this perception. However, this is not a matter of direct vs. broker because at the end of the day, improving the image of the industry is the responsibility of all life insurers. There is an interest from the consumer, but the question is, is everyone up for the challenge?" concludes Louw.