Moneyweb reports that many South Africans overestimate their risk of permanent disability, critical illness or death, but underestimate their risk of temporary illness or injury, a survey has found.  

This suggests that people might have an incorrect mix of risk cover.  They might be paying for life cover even though they don’t need it, or might be under-insured for events that were most likely to affect them, according to FMI’s #RealityCheck Consumer Survey.  Brad Toerien, CEO of FMI, said people generally needed more disability cover than life cover.  If they become disabled, they will still need to provide for themselves as well as their families, but if they die there will be one less mouth to feed.  Yet, the amount of life cover sold is more than twice as much as disability cover.  The consequence was that people did not have the cover they needed, or had life cover before they needed it, Toerien indicated.  In his view, the survey suggested that people did not understand their risks.  The survey found that the inability to earn an income for three months would be devastating to most South Africans.  Over a third of respondents expected “catastrophic results” if they could not earn an income for longer than three months, like losing their house.

• Read this report by Ingé Lamprecht in full at Moneyweb

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