Life assurance that lasts forever after one payment
No debit order blues if your income is irregular or you lose your job
Many South Africans find it hard to accept that they have nothing to show for paying life insurance premiums for years, but due to income interruption can't continue to pay.
If you are unable to pay your life assurance premiums for a few months, despite having paid them for years, you lose all your cover.
Many South Africans find that hard to accept. For this reason, one of the country’s newest life assurance providers, Ongeza Life, has turned life assurance on its head and is selling chunks of life cover that on payment of a single premium remain in place for the rest of your life.
This means your cover can never fall away and you do not have to be tied in to paying a regular debit order that may be problematic if your income is irregular or you lose your job.
The new company, Ongeza Life, operates a cell captive underwritten by Guardrisk Life which is a well known insurer (and a member of Momentum Metropolitan Holdings). The policies are reinsured by Munich Re, a leading reinsurer serving life companies around the world.
Ongeza Life founder and actuary Patrick Ndururi says the new policies for South Africans are a world-first as your policy will not lapse if you are unable to pay your premiums and will not cease when you lose your job or when you retire.
You also don’t need to have a regular income and pay a regular debit order, and you don't need to go for medical tests.
Premiums start at R500. The amount of cover this premium will buy you depends on your age, gender and your level of income which is used as a measure of your lifestyle.
A 24-year-old woman earning R10,000 a month would be able to buy R1,962 of cover for R500. If she was able to pay that each month for a year or R6,000 in total, she would buy just short of R32,000 of cover for the rest of her life.
She – or her employer or retirement fund – could also take out R20,000 of cover for a once-off premium of just over R2,000 or a R100,000 of cover for a once-off R9,674.
Ndururi says stokvel members could use their rotational benefit to buy such cover or employers or retirement funds could use bonuses or surpluses to buy this cover for their employees or members.
Anyone who earns their income in irregular amounts – sports people or commission earners – or housewives or husbands who do not earn, may find the product useful, Ndururi says.
The policies are also suitable for employers wanting to give domestic workers or their employees in a small business a lasting benefit, he says.
If you need life cover to buy a house, a car, or anything else on credit, you can cede the policy to your credit provider.
If you are retrenched or resign you may want to keep the cover you enjoyed through your group scheme. Some schemes offer what is known as a continuation benefit that allows you to convert the group cover you enjoyed into your own name, but you need to be able to continue to pay the premiums.
The Ongeza Life Plan, however, allows you to buy a benefit with your lump sum severance pay or resignation benefit without having to worry about future premiums when your income is uncertain, Ndururi says.
You don’t have to go for any medical tests or declare any health conditions, but there is a waiting period of six months during which time deaths from natural causes are not covered. If you die in an accident within the first six months of buying the cover your heirs will, however, still receive a benefit.
This means you cannot take out the cover when you are terminally ill and close to death and expect that your heirs will get a payment.
To mitigate the risk of people taking out cover when they are ill, Ongeza Life only allows you to take out R150,000 of cover in any year and the maximum amount of cover you can take out is R1m.
You must be 17 years or older but not older than 66 to take out a policy. You also need to have a South African ID or passport to take out an Ongeza Life policy because premiums for those living outside the country will be cost at a different rate.
Ndururi says Ongeza Life policies can be used by foreigners to cover the cost of repatriating their bodies to their home country should they die in South Africa.
The policies can be bought online or from brokers.