Personal Capital

Life Cover Covid 19

Life Cover premiums are seemingly set to increase for those unvaccinated.

According to Stats SA, from July 2020 and June 2021, South Africa witnessed both spikes of mortality during the first and second waves of the COVID-19 pandemic, per the 2021 Mid-year Population Estimates (MYPE). The considerable increase in deaths in 2021 (approximately 34%) resulted in a decrease in South Africa’s life expectancy (LE) at birth in 2021.

Two waves of the epidemic spread across the country between July 1, 2020, and June 30, 2021, and by June 11, 2021, the National Institute for Communicable Diseases (NICD) declared that the country had officially entered the third wave. These waves culminated in a much greater percentage of deaths in the country than would have occurred otherwise. As a result of the increase in mortality, life expectancy at birth has drastically decreased.

Fin24 reported that, according to recent death claims numbers issued by the Association for Savings and Investment South Africa (ASISA), more than one million policyholders passed away between 1 April 2020 and 31 March 2021 in South Africa. Individual life, group life (provided by companies), credit life, and funeral insurance plans are all included in the data.

In comparison to the previous year, the death toll increased by nearly 310 000.

Categories  Total death claims:   1 April 2020 to 31 March 2021Total death claims:   1 April 2019 to 31 March 2020% change in no. of death claimsTotal value of benefits paid:   1 April 2020 to 31 March 2021Total value of benefits paid:   1 April 2019 to 31 March 2020% change in Rand amount
Individual life64 75041 37157%R29.11 bnR17.12 bn70%
Group life108 00144 371143%R7.98 bnR4.87 bn64%
Funeral821 952605 24736%R8.74 bnR5.71 bn53%
Credit life28 38022 31927%R1.75 bnR1.39 bn26%
Totals1 023 083713 35043%R47.58 bnR29.08 bn64%

What does this mean for the insurance industry and you, as a policy holder?

Recently, Discovery Life became the first South African insurer to consider Covid-19 immunization as part of its underwriting criteria. When determining premiums, the company said it will treat a rejection to be vaccinated against Covid-19 in the same way it treats smoking or lifestyle disorders like diabetes.

On Thursday (26 August 2021), the company stated, “Clients with new policies who indicate that they are unwilling to be vaccinated may, unfortunately, be subject to higher premiums due to the increased risk”.

On July 29, 2021, the new underwriting regulations took effect. Discovery, on the other hand, is willing to adjust premiums for unvaccinated clients who later change their minds.

This could inevitably cause a snowball effect for other insurance companies/various industries as they may follow suit as Sanlam has also introduced new underwriting policies in relation to Life Cover concerning Covid-19 which has come to effect from the 20th of September 2021.

Fin24 was informed by Sanlam that, “we would prefer to vaccinate as many of our employees as possible. However, some people may have valid reasons for not vaccinating, such as medical conditions. Such exceptional cases will be addressed in terms of the group’s relevant policies”.

The key reasons for the intended policy, according to Sanlam, are occupational safety and the prevention of loss of life.

Discovery Life CEO Riaan van Reenen told Fin24 that the company decided to take this approach because of evident patterns that appeared in the previous year.

However, it had to take vaccine availability into account first. Because of the mortality risk that Covid-19 survivors confront, it seemed like the perfect time to act now that immunizations will be offered to the full insured population on September 1st.

What is stopping you from vaccinating?

“Yes, the vaccine is not a cure. But if you have a chance to survive it, why wouldn’t you take that option?” – said, Priscilla Potgieter to News24.

Why would insurance companies seek to charge the unvaccinated high Life Cover premiums than others?

Due to the current Beta and the Delta variant which have caused the disease to be extremely rampant than was originally projected and this can be seen with even the publicized deaths of well known healthy individuals such as the media mogul and actor, Shona Ferguson and the lovey Dr Sindi van Zyl.

Shona Ferguson and Connie Ferguson

According to Discovery Life’s research, Covid-19 poses a considerable risk to the health of life insurance policy holders of all ages. For Covid-19 survivors in their mid-forties, the risk of mortality rises well over the usual population mortality rates.

The research also found that a fully vaccinated 75-year-old has a similar chance of dying from Covid-19 as a 40-year-old who is not vaccinated.

Bruce Cameron, a journalist from Fin24 recently published an article where he stated that “there is no reason why people who have had the vaccine should pay higher premiums to subsidise anti-vaxxers”.

Bruce Cameron, a journalist from Fin24 in his recent article also provides emphasis on the growing view that anti-vaxxers should be penalized by life insurance companies so that those who have been vaccinated do not “cross-subsidise” them.

The article further expresses that there are two things, both vaccinated and non-vaccinated individuals should do:

  1. Seek financial advice from a reputable financial planner, who is registered with the Financial Planning Institute. This will ensure that you receive sufficient insurance coverage as it should be meticulously calculated on a regular basis.
  2. Get vaccinated. In this pandemic, the only proven lifesaver is a vaccine, so don’t be fooled by the various conspiracy theories and protect your health, the lives of your loved ones and ultimately your finances when it comes to affordable, reliable and sufficient life insurance premiums.


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