In South Africa life insurance is known as long-term insurance. It includes insurance against dying, disability and severe illness or dread disease.
Life insurers can offer you disability insurance with either a cash lump sum benefit or as an ongoing income payment. If you want an ongoing income payment, you should look for what is known as an income protection policy.
Life and disability insurance may be offered to you as an employee benefit – known as group risk benefits.
If you are expected to take out life and disability insurance to pay off your debt should you die or become disabled, this cover is known as credit life insurance.
Life insurers can also offer you funeral insurance that is intended to provide for funeral costs.
They also offer health insurance policies and there are restrictions on these policies to ensure they do not duplicate the cover you should get from your medical scheme.
Check if they are registered
Long term insurers must be registered as life insurers with the Prudential Authority and you can check if they are registered here.
They also need to be licensed by the Prudential Authority.
Insurers are regulated by the Insurance Act and among other things, its prudential regulations ensure that insurers have enough capital to meet their obligations to you as promised in a policy document. Compliance with what are known as capital adequacy requirements are regulated by the Prudential Authority.
Providers of life insurance and particularly funeral insurance with benefits below R100 000 may be registered as micro-insurers.
The way an insurer conducts itself in the market is regulated under the Policyholder Protection Rules under the Long-term Insurance Act.
Credit life insurance also has to comply with regulations under the National Credit Act.
Complaints
If you have a complaint about a life insurance product, check on the life insurer’s website if it has an internal ombud to whom you can address your complaint.
If there is not internal ombud or if the internal ombud does not resolve your complaint to your satisfaction, you can take your complaint to the Ombudsman for Long Term Insurance within the National Financial Ombud Scheme (https://www.nfosa.co.za). This ombud scheme is a voluntary one but most insurers agree to abide by its jurisdiction.
Long-term insurance policies are typically taken out for long terms of at least five years or until your retirement or death.
They are distinguished from short-term insurance policies which are typically renewed annually. Short-term insurance is typically for insuring things you own - like your home, your car or valuables.
