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Life insurance from a trusted insurance company can give your loved ones financial security when they need it most and change their lives for the better! We find out how life cover works, who needs life insurance and who qualifies for life cover.
Understanding life insurance
The purpose of life cover is that it allows you to empower your loved ones financially. The pay-out from a life insurance policy for a valid claim ensures that your family has funds to pay their debts and/or living expenses after the funeral. This financial security means that not only can they maintain their standard of living, but that they also have opportunities to grow their generational wealth, such as paying off a home loan or investing all or a portion of the pay-out.
Who needs life insurance?
If you have a family, close and/or extended, who rely on your income, you need life insurance! Even if you are single, you may need life cover because you may have debts such as a student loan that your family would be liable for if you passed.
When you are deciding who needs life insurance, always ask how a death would affect those closest to you, and how they could benefit from a pay-out from a life insurance policy. If you are unsure, speak to a financial adviser who will conduct a needs analysis to determine if and how much life cover you need.
Deciphering eligibility criteria
Does everyone who needs life cover qualify for a life insurance policy? In most cases yes, as long as they are:
- A South African citizen – most South African insurance companies require life cover applicants to be South African citizens, in some cases permanent residents may qualify.
- Aged between 18 and 65 years. Although some companies may offer cover to the over 65s who apply, this cover is usually extremely expensive!
- In relatively good health and employed or earning a regular income.
In addition, life cover policies need to be paid via debit orders, so a bank account is a must!
The life insurance underwriting journey
When you apply for life cover, underwriters will assess your application. This involves looking at your personal details such as your age, gender, occupation and health to determine the appropriate sum assured and premium.
To complete their life insurance underwriting, your insurance company will also ask for details on:
- Your health, including your age, gender, height and weight, details of any chronic conditions including high blood pressure and diabetes, as well as close family history of any diseases such as cancer and heart disease
- Your qualifications, such as if you have a matric, tertiary qualification or post graduate qualification
- Your occupation, including details on how much time you spend on admin (at a desk), how much time you spend doing manual labour, such as a factory worker, and how much time you spend travelling for work
- Any dangerous hobbies such as bungee jumping
Top tip: Answer all of these questions honestly and truthfully and in full. Leave nothing out! Not telling your insurer all your details, especially about any health conditions, could result in claims being reduced or declined.
Medical tests may be, but are not always, requested
Insurance companies keep medical examinations for life cover applications to a minimum, which means that for the most part the days of requiring a full medical for a life insurance policy are over! However, some insurers do require a basic medical check for life insurance underwriting purposes, which can include blood pressure, blood glucose and cholesterol tests. Other insurers, including 1Life Insurance, require only an HIV test, that can be done at a pharmacy using a cheek swab. Some policies, with limited sum assureds, require no medical tests or HIV tests at all!
Once the application is completed and all requested medical tests taken, the insurance company reviews the application and results and underwrites the policy. In most cases, the final decision is that the life assured is offered the cover they requested at an affordable premium.
The reality of denials
How often is life insurance denied? Very rarely, if ever! However, in some cases alternative cover is offered – see below - or a premium loading is imposed. Death due to a specific cause may also be excluded from the policy. It is extremely rare for those who need life insurance to be denied any life cover completely.
Alternative cover
Accidental death benefit policies offer cover for a life assured in the cases only where the cause of death is accidental, such as a car accident. If a life assured passes due to cancer and has only accidental death benefits, claims will be declined as cancer is a natural cause of death, not an accidental cause of death. Death benefits due to accidental causes of death may be offered as an alternative to life cover if the life assured has not taken medical tests, such as an HIV test, or has serious health conditions.
Premium loadings
It may also happen that you have a chronic condition, which increases your risk factor, but not to the point where you are offered cover for accidental death benefits only. In this case, insurance companies offer you cover but at a higher premium than the “healthy” applicants. This additional premium is called a loading.
Exclusions
This is when death due to a specific cause, such as cancer or heart disease, is excluded from the policy.
Things to know before applying for and taking out life cover
Find out from potential insurance companies:
- What their eligibility criteria are and when they deny life insurance
- How their life cover works, including their application and life insurance underwriting process, and whether or not you can apply online
- What information they will need from you, including any medical records
You should also check they are a licensed insurer with the Financial Sector Conduct Authority.
1Life Insurance has been changing lives since 2006
1Life Insurance has been changing lives since 2006, offering you and your loved financial peace of mind when you need it most. We have been voted an iconic brand 2 years in a row, in the 2022/2023 and 2023/2024 Ask Afrika Icon Brands Awards and have been recognised as South Africa’s #1direct life insurer in the annual Swiss Re Reports for 11 consecutive years! Our policyholders are always top of mind, and in 2023 and 2022, we had the highest net sentiment in the PWC SA Insurance Index Report.
We offer flexible life cover that can be tailored to your needs at an affordable premium. You can buy cover online and save up to 13% on monthly premiums, and you can access and update your policy on the online policyholder services portal and the WhatsApp service centre. Talk to us today and find out how we can change your life.
Life cover made easy
If you are aged between 18 and 65 years, you are likely to qualify for life cover that can ensure your family has financial security. Life insurance is easy and quick to take out, and an essential part of your financial plan! Disclose everything when you apply so the life insurance underwriting process is accurate, and your life cover policy can change your family’s lives for the better.