Insurers can use funeral policies to encourage public to buy other forms of insurance
10 Apr 2011
Funeral policies are the dominant insurance product in the low- to middle-income segment of the insurance market.
Funeral policies are the dominant insurance product in the low- to middle-income segment of the insurance market. This is the most attractive product for this segment as it fulfils the immediate need to enable families to bury their loved ones in dignity. A November 2010 study by the Bureau of Market Research has revealed that insurance cover in this segment is on the increase but identified high insurance gaps. Jurie Nel, head of Product Development at Assupol Life says that it is necessary, however, to encourage this segment to extend their portfolios to include life cover.
“We often find that in instances where the actual risk is a loss of income through death or job loss of the primary breadwinner, the dominant insurance product taken is funeral cover. Normal living expenses such as payments of home loans, school fees, groceries and other costs still need to be taken care of upon the death of the primary breadwinner. Lack of provision in this regard poses a risk on the economy at a micro and a macro level considering that the majority of the South African population falls into this segment. Assupol Life recognised the need to adequately address this gap and hence introduced the Progress 4Sure Plan”, Nel says.
The Progress 4Sure Plan was introduced in 2008 and provides life, disability and dread disease cover for up to R200 000 without the need for medical underwriting. The plan includes benefits such as the provision of cash loyalty rewards in cases where policyholders have not claimed for a particular period. This extra “savings” component returns cash to the policyholder and can be used at the clients’ own discretion.
Nel adds that Assupol Life services a market that in the past made use of insurers exclusively for funeral cover. The exciting news, he says, is that “more people are becoming aware of their financial risks, and are taking steps to cover them. Through the provision of affordable and simplified insurance products such as these, financial exclusion in the micro insurance industry will deteriorate”.