Reading this thinking, "Ah, ! not another boring article about life insurance", well then, you'd be wrong. We don't write boring articles. But because life insurance isn't always the most exciting thing to read about and research your journey towards being protected, we decided to answer the most common questions and inaccuracies our team tends to see daily.
We're in the business of honest life insurance so we will be frank here.
Life insurance isn't just life cover; it's so much more
Life Insurance is most commonly associated with a single product, life cover. But this is just one small component of a holistic financial plan and life insurance. In the same way that if you have assets, you don't just insure a car; you don't just insure your life with life insurance.
Life Insurance refers to a bunch of products that have been designed to protect you financially if you suffer a life-changing event, such as an illness, injury, disability or death. More specifically, it is a product that is designed to put you (and your family) in the exact same financial position that you would have been in had you not suffered from such a life-changing event. For example, if you become sick or disabled and are unable to work, life insurance is designed to cover and replace your lost income so that you don't have to worry about how to support yourself.
So, Life Insurance refers to a group of products, not just life cover. You get:
- Life Cover: Life Cover is a benefit that will pay your loved ones a sum of money in the event of your death. Life cover is there to look after and provide financial security to your dependants if you are no longer alive and can support them. Life cover may also be used to pay off any debts that you may have outstanding.
- Disability Cover: Disability cover is a benefit that will pay you a single lump sum if you become permanently unable to work. The pay-out can be used to cover your expected future lost income and all the expected future expenses that you and your family may incur after you become disabled. It can also be used to pay off any outstanding debt so that you can sleep easy at night knowing that your loved ones are taken care of.
- Income Protection: Your income is your most valuable asset. If you were unable to work, it would be difficult for you to cover your daily living expenses, such as housing, clothing and food costs. The regular income payment replaces all or a part of your lost income (depending on how much you select), which means that you won't experience financial strain due to your disability and inability to work.
- Dreaded Disease Cover: Otherwise known as Severe Illness or Critical Illness, it pays you a selected amount if you suffer from an illness, disease or injury. This pay-out can be used to cover expensive medical treatment, new-age medical devices or any home improvements that may be needed if you suffer a severe illness or injury.
In fact, unbeknown to most people, your biggest asset when you are a young adult is your future income, making income protection and disability cover far more relevant than life cover. A 30-year-old accountant earning R50 000, for example, is exposed to a total loss of income (in today's terms) of well over R15 Million*. Suppose this accountant becomes disabled or sick and unable to work. In that case, that is R15 Million in lost income that they will need to find from another source (like relying on family) to maintain their standard of living until retirement. So, the next time you think about life insurance, don't just think about life cover.
Everyone needs life insurance, even you.
We are all just human beings, and the only certainty in life is that eventually, we all pass away. So, while you may think that car insurance is more important, it's not- you may never be in an accident, but there is a guaranteed chance you will need life insurance at some point.
Young adults without a family, in particular, don't think they need life insurance. But these 'Invincibles' actually have the greatest need for it- while their need for life cover is lower, their need for income protection is higher. That's because their time to retirement is the longest, so the total future income they need to protect is higher than older people (more than 2.5 times higher***).
Despite the need for this product, it's not something we like to think about until something bad happens. But by then, it may already be too late for you to get life insurance.
On average, in South Africa, a healthy young adult male has a little over 80 years of age life expectancy. This means that by the time you are 30, you have already lived more than a third of your expected life. Now, while the vast majority of your risk of claiming in your twenties is behavioural and driven by accidental events (such as motor vehicle accidents), this risk starts to change and increase quickly. The chances of you suffering a (non-accidental) life-changing event are over 150% higher between ages 31-40 compared to ages 21-30, which more than double between ages 41-503.
In contrast to most people, you should not think about getting life insurance when you are already sick, but rather when you are healthy. If you are ill and then start thinking about getting cover, you may have to pay higher premiums (for the rest of your life), or you may not be able to get cover at all.
This means that you should get coverage as soon as possible to lock into a lower premium. But old life insurers tend to punish you when you do this. That's because they force you to lock into a long-term contract, with premiums that start out low but increase as you get older (when you need the cover), and with coverage that is static and difficult to change to meet your needs as they evolve (the type and amount of cover you need when you are young is very different to the cover you will need when you are older).
OneSpark's Pay-As-You-Need model was designed to overcome these flaws in old life insurance and make it easier to take it out when younger. When you're young with no financial dependants, for example, your need for life cover is minimal, but your need for income protection is high, but this changes as you get married and have kids. To align with this changing need for cover, at OneSpark, you get a living policy that uses advanced algorithms to adjust your policy dynamically. Plus, the premium you pay relates to your risk of claiming today and not your risk of claiming in the future.
In short, this means that with OneSpark you're not locked into a long-term contract but rather get a policy that evolves every year to match your changing needs. This creates a far more sustainable product for you and results in you saving up to 70% on your premiums compared to old life insurance products**.
So, the next time you hear of someone getting sick and delay taking out life insurance again, just don't; it could well save your life one day (and there is no longer an excuse with OneSpark around now).
It's not expensive, relative to the cover you get, it's the cheapest form of insurance.
Old life insurance is expensive; it's hard to deny it. In fact, of the premium that you pay towards it, only around 40% of it goes to protecting you, with the rest covering such things as the company's bloated expenses, archaic systems, and crazy profit margins***. This just wasn't fair, so we decided to change things up. Instead of crazy profit margins, we created an honest and transparent peer-to-peer model where we take a small fee to administer your policy. We embedded the latest advanced technology and created new powerful AI algorithms to make our systems and processes more efficient and automated, saving tons of money and allowing us to reduce our expenses significantly.
The result is a life insurance product saving our clients up to 70% compared to old life insurance products **.
As an example, with OneSpark, every R1 in premium gets you over R20 400 in Life Cover and R32 200 in Disability Cover ****. In contrast, every R1 in premium for your cell phone insurance only gets R105 cover*****, while R1 in home insurance gets you only R714 cover******. That means that you get 28 times the amount of coverage for every rand that you spend on life insurance compared to other types of insurance. Combining this with the fact that life insurance is the only insurance that you are guaranteed to need, life insurance seems like a no-brainer eventually.
The average South African professional can pay for their life insurance needs by simply cutting out coffee. Research indicates that the average professional worker drinks two coffees a day *******. At R30 a cup ***, that's over R1 800 a month spent on coffee alone. For R1 800 at OneSpark, a 30-year-old professional male can get R13 Million Life Cover, R13 Million Disability Cover, R3 Million Illness Cover and R100 000 Income protection. Now, what seems like a better use of that money?
It's not time-consuming at OneSpark; you can activate it in minutes online.
We live in a wonderful world where we can get almost anything at the tap of a button and have it delivered to our doorstep in a matter of hours, let alone days. It's no wonder anybody likes old life insurance where you have to undergo painful medical tests and wait upwards of three weeks to activate your policy from the time you first get a quote.
We built advanced tech to advance life insurance and bring it up to date with everything else in the 21st century. We created world-first artificial intelligence algorithms that allow you to activate your cover in minutes, anytime, anywhere. And not just a one or two million rands in cover. You can now get up to R10 Million Life and Disability Cover, R2 Million Illness and Injury Cover, and R100 000 Income Protection online without painful medical tests.
While there may be some people where we need more information before we can decide, 9 out of 10 clients are currently going through the process without requiring tests. Everyone can instantly activate a cover of some sort online, regardless of their health status.
So, it's time to change your perception of life insurance being a painful, lengthy process; it doesn't have to be if you switch to OneSpark.
Old life insurance is complicated, but OneSpark has made it simple and easy.
Old life insurance is crazy complicated. From the very basics of understanding the need for a particular benefit, to how much cover you need, to the gibberish-sounding medical definitions, to the hundreds of different benefits on offer across the industry and the nuanced jargon, most people have no clue how to navigate this complex landscape. And understandably so.
While it's easy to sit back and design a product that continues with this trend, we wanted to create a product and process that was as simple and easy as possible by doing all the hard work for you.
To do this, we built advanced algorithms and smart tech to take out a policy online without having to scroll through hundreds of websites to understand what you need, how much you need, and how the premium compares to other similar products in the market. You get a quote in seconds, can quickly answer easy-to-understand questions online, and get a completely personalised policy to your financial needs and family situation. We even tell you your level of protection depending on the type of cover you select. Plus, if you're still unsure, you can chat to an advisor online who can guide you through the product and process.
It's not easy to make life insurance simple, but we're doing everything we can to make your life easier so you can spend time on the things that matter most, not your life insurance.
References and assumptions:
Assuming 8% salary inflation until age 65 and a risk discount rate of 10%. Premiums are risk profile dependant and subject to change. Comparisons were made on a like-for-like basis against major insurers as at June 2021.
Internal OneSpark research
Assuming a 21 year old female professional, SE class 1, non-smoker.
Mobile phone insurance taken from publicly available online sources and assuming an apple iPhone 13 pro.
Home insurance is taken from publicly available online sources and assuming a house with R 1million.