In today’s unpredictable economic climate, South African families are prioritising financial security, with many turning to life and funeral insurance to safeguard their loved ones. These policies provide essential support, covering funeral costs, settling debts, and ensuring that basic needs such as groceries and school fees are met when the breadwinner passes away.
But life insurance is more than a financial product; it’s a long-term relationship built on trust. Policyholders depend on insurers to deliver on their promises, often decades later.
“Our clients rely on us to fulfil our contractual obligations in the future – sometimes decades later – so it’s fair to say that trust is at the heart of the relationship between insurer and insured,” says Yazeed Adams, executive head of strategy and transformation at MiWayLife.
While some consumers remain sceptical about claim payouts, the data tells a different story, says Craig Baker, CEO of MiWayLife. “Over the past three years, 75% of direct life insurers have paid out on claims – and MiWayLife is on a par with industry standards in this regard”. He emphasises that the industry is committed to honouring legitimate claims.
Statistics from the Association for Savings and Investment South Africa (Asisa) reveal that between December 2023 and June 2024, the industry paid out R298 billion in claims and benefits, up from R287 billion in the same period the previous year.
Despite these figures, some claims are inevitably declined, often for reasons outlined in policy contracts. MiWayLife reports that between 2022 and 2024, 20% of the 1,862 claims it received were declined. The primary reasons include:
- Non-disclosure of medical information: Failure to share relevant health details can result in declined claims, as insurers rely on full transparency to assess risk accurately.
- Claims during the waiting period: Policies often include a six-month waiting period for natural deaths to prevent fraud or claims made when death is imminent.
- Claims before the policy start date: Incidents occurring before the policy's inception are not covered.
- Missed premiums: Policies operate on a month-to-month basis, and lapses in premium payments can nullify cover.
- Death by suicide during the waiting period: A standard clause in most policies excludes claims for suicide within a specified timeframe, typically 12 to 24 months.
Adams advises consumers to familiarise themselves with the terms and conditions of their policies to avoid issues. “Be transparent about any medical conditions, make sure you are clear about the waiting period, and ask about exclusions to avoid potential claim issues,” he says.
Fraud remains a significant challenge for South Africa’s life insurance industry. According to Asisa, insurers detected 13,074 cases of fraud and dishonesty in 2023, a 46% increase from the previous year. These fraudulent activities cost the industry R175.9 million, with insurers increasingly relying on forensic teams to identify and prevent criminal behaviour.
Fraud doesn’t just hurt insurers; it impacts honest policyholders too, says Baker. “Fraudulent claims cost insurers significant amounts of money, which is often passed on to honest policyholders in the form of higher premiums,” he says. This erodes the trust central to the relationship between insurers and their clients and undermines the industry’s ability to support families in times of genuine need.
“We can all play a part in combating fraud to keep premiums fair, ensure swift payouts, and maintain the integrity of the entire industry,” Baker says.
According to Barker, ultimately, life insurance is a partnership between the policyholder and the insurer, with both parties having responsibilities. Policyholders must provide accurate information and keep up with premium payments, while insurers must honour valid claims.
“Life insurance is closely tied to family well-being and security, which is why both parties should act in good faith and honour this deeply personal commitment,” says Adams. “It’s not worth putting your family at risk by making missteps, whether purposeful or not.”
PERSONAL FINANCE