Life Insurance Myths Dispelled

February 10 - Year after year, we hear of staggering underinsurance rates among South Africans.

A dismal 12% of all South Africans have life cover in place, while only half of that number protect their income through an insurance policy.

Why is it that South Africans are so fearful of life insurance? Perhaps it is because there are so many myths surrounding this industry.

Many South Africans, for example, believe that life insurance is not an affordable commodity and therefore don't even consider it an option. However, it is quite possible to get cover for as little as R100 a month, giving consumers peace of mind for practically pittance.

Another myth is that insurance companies are only on the lookout to reject claims. Statistics show that insurance groups pay out - and are obliged to by law - as long as the customer has been honest and upfront when taking out the policy.

Some South Africans figure that there chances of dying in an accident are greater than by natural causes and therefore their families will receive payouts from accidental death cover.

However, insurance analysts disagree and say that making these types of decisions are like playing Russian Roulette. Who will pay out if one has a heart attack?

Some also believe that it is sufficient that only one partner has life insurance cover (usually the man). Again, this is not a wise decision as it is practically impossible in today's economic situation to live on one salary alone.

The simple fact of the matter is that most people do not have sufficient cover for life or income earnings.

Taking out an insurance policy is one of the best decisions one can make and the ultimate gift to one's family.