Protect your family from financial ruin by closing your death and disability cover gap

2016-12-01 06:00

The cost of closing the gap

“Times are tough, but it is important to weigh the costs of your insurance against the risk to you and your loved ones of being caught without,” states Dempsey, deputy CEO of ASISA.

He emphasises that the loss of a breadwinner can have devastating financial implications for households, resulting in significant hardship.

For instance, he notes that the costs of closing the insurance gap are relatively low, as the average earner would only need to spend an additional 4.2% of their monthly income (net of tax) to purchase adequate life insurance, and 2.4% a month for disability cover.

“Without purchasing additional insurance, however, households would be forced to generate an additional R4 970 each month following the loss of a loved one and R5 977 following a disability,” he said.

He warns that if households were unable to generate this additional income to maintain their standard of living following a tragedy, the study indicates that families would then need to substantially reduce their expenses.

“This could mean cutting back on expenses by as much as a 34% following a death and 30% following the disability of an earner in order to plug the insurance gap, which could be very difficult,” he says.

He observes that in difficult economic conditions, this could mean that some households would become dependent on other family members, potentially reducing the financial well-being of a much wider group of people.

“Insurance is often a grudge purchase, as you won’t see any immediate benefit for this protection.

The Gap Study reinforces, however, the benefit of sacrificing a relatively small portion of your income to protect yourself, your family and potentially your wider social circle from the devastating financial impact of a death or disability.”

This article, is an excerpt from ASISA (Association for Savings and Investment South Africa)


The information is only intended to be of a general nature and should not be relied upon by any part without obtaining full details from a licenced financial service provider.

You could contact me on 083 399 3905, my office on 032-944 3051 or e-mail me on for an appointment or further information and any other financial advice.

I am a financial planner for the past 33 years.

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