The true cost of ‘Set-and-Forget’ life insurance

The latest ASISA Insurance Gap Study found that the country’s 16.1 million formally employed income earners had enough life and disability cover to replace just 39% of the income their families would need if they died or became disabled. The resulting shortfall stood at R50.4 trillion at the end of 2024, up from R35.4 trillion in 2021.

For advisers, the message is clear: having a policy is not necessarily the same as having enough protection. A policy that was appropriate when a client was single, renting and earning a certain income may look very different once they have bought a home, started a business, had children, taken on debt or accumulated significant assets.

Why reviewing old policies matters

Clients often assume that because they already have life or critical illness cover in place, they are adequately protected. But products issued even 10 or 15 years ago may no longer reflect the best available definitions, claims processes, or benefits. Outdated policies can expose clients to risks such as limited pay-outs, unnecessary exclusions, or onerous notifiable events that force them to disclose lifestyle or medical changes long after the policy was taken out.

Regular reviews not only safeguard clients but also strengthen your role as a trusted adviser who ensures their cover evolves with their lives.

Pay special attention to critical illness cover

One of the most important areas to review is critical illness cover. Medical advances and industry competition mean that the scope and definitions of conditions have improved significantly. For example, a heart attack or cancer definition from 20 years ago may be far narrower than today’s versions, where broader wording allows more clients to qualify for claims.

By comparing a client’s current definitions against what is available in the market, you can highlight whether their cover still provides meaningful protection. If their policy excludes certain modern definitions or requires severe impairment before paying out, you should explain the potential consequences and discuss whether a move to a more up-to-date product would be beneficial.

The 2025 ASISA Insurance Gap Study estimates that 24,097 formally employed income earners would experience a critical illness event – equivalent to around 66 people a day.

South Africa’s changing health profile adds another layer to the conversation. Stats SA’s latest mortality data shows that diabetes accounted for 5.8% of recorded deaths in 2023, making it the leading underlying natural cause of death, while cerebrovascular diseases, including stroke, accounted for 5.4%.

For advisers, this reinforces the importance of looking beyond the name of a critical illness benefit and examining the definitions, severity thresholds and conditions covered. The question is not simply whether a client has critical illness cover, but whether the policy is likely to respond meaningfully to the health risks they may face.

Watch out for outdated notifiable events

Older contracts often include onerous notifiable events clauses, which require clients to inform the insurer of any lifestyle or occupational changes after inception. This can create uncertainty and risk of non-disclosure. Look for more modern policies with fewer of these ongoing disclosures.

This is also an area where a policy review can provide value without necessarily resulting in a recommendation to replace the policy. Advisers should first understand the contractual obligations attached to existing cover and assess whether they remain appropriate for the client’s circumstances. Where an older policy offers valuable guarantees or benefits that could be lost on replacement, those trade-offs need to be carefully considered.

The challenge when clients can’t move their cover

Sometimes, despite the shortcomings of their cover, a client is simply unable to switch policies. If they have developed serious health issues, any attempt to move to a new insurer may result in declined applications or unaffordable loadings. This is where your role becomes both delicate and critical.

The first step is prevention: make sure clients don’t reach a point where health problems lock them out of accessing cover. Recommending insurers that allow changes or increases without requiring medical underwriting, such as BrightRock, can future-proof their protection. These features ensure that as clients’ needs grow, they can adjust their policies without being penalised for health changes.

If a client is already in poor health and stuck with their current cover, your advice should shift to preservation. Emphasise the importance of never letting that policy lapse, as it may be their only personal cover. In addition, review their group risk benefits through their employer. Some group schemes allow members to increase their cover within certain limits without full underwriting. They should also seriously consider converting any group risk cover to personal cover if they leave their job. This can provide a valuable safety net for clients who are underinsured but are unable to secure individual cover.

Your role as the adviser

Clients may be reluctant to change long-standing policies, but when you explain the risks of outdated cover and the advantages of modern alternatives, you add measurable value to their financial security. By keeping an eye on evolving product definitions, exclusions, and underwriting rules, you can help clients avoid being trapped in policies that no longer serve them.