Life insurance without automatic annual premium increases was one of the selling points touted by Capitec Bank when it officially launched its new life cover product on Tuesday.
The bank announced in April – when it released its annual results – that it would launch the product this month. At the time, the product was being piloted among Capitec’s employees.
Capitec said the FSCA’s 2022 Financial Sector Outlook Study stated that only 10% of South Africans have life insurance, down from 12% in 2019.
“South Africa’s vast insurance gap is likely due to people’s experience of life insurance as complicated, expensive, and intimidating. The complex terms and conditions, invasive medical tests, lack of transparency around premiums, and prohibitive selling practices deter many from getting the cover they need to protect their loved ones. We’re committed to helping South Africans overcome these obstacles by providing a simple, affordable, accessible, and personalised life insurance solution,” Gerrie Fourie, Capitec’s chief executive, said in a statement this week.
The premiums on Capitec Life Cover, as the product is called, will not increase annually unless additional cover is taken. “This is unlike the rest of the industry, where premiums tend to increase by 5% to 8% annually without corresponding increases in cover,” Capitec said.
It said the application process is “quick and easy”. Clients answer six to eight questions that are “easy to understand” and do not require them to go for medical tests. The application takes “less than 10 minutes” and can be done via the Capitec app or at a branch. Clients will know “within minutes” whether they are covered upon acceptance of the quote.
“There’s no jargon and no 30-page contracts with complex clauses. We explain everything in plain language that clients can relate to,” Fourie said.
Clients will not encounter any hidden clauses or excessive exclusions designed to avoid payouts. “Throughout the application process, we’re transparent about when we will pay claims and when we won’t,” he said.
Clients can choose one of three payout options, or a combination of all three:
- A once-off payment to cover beneficiaries’ immediate expenses, such as outstanding debts or large financial needs.
- A monthly income paid to beneficiaries for up to 24 months.
- A payout into an umbrella trust so that children’s education and other long-term needs are taken care of. The trust ensures that the funds are managed responsibly and used exclusively for the children’s needs such as school fees, uniform costs, and groceries.
“We realise that a mother’s priority may be ensuring her kids can stay in school if something happens to her, while an entrepreneur may need a lump sum to settle business debts. That’s why we let clients decide what mix of payouts will best protect their loved ones,” Fourie said.
Clients can manage their cover, add or change beneficiaries directly on the app, and even submit claims via WhatsApp. Those who prefer in-person service can visit a Capitec branch for assistance.
Fourie told investors in April that the bank’s 22 million customers and more than 800 branches will put it in a good position to win a share of the country’s life insurance market.
Capitec obtained its own long-term insurance licence in its 2023 financial year and began issuing credit life insurance policies in May 2023. Before then, Capitec’s credit insurance policies were underwritten by Guardrisk.
The transfer of the credit life insurance policies from the Guardrisk cell captive to Capitec Life is expected to be completed by July or August, Fourie said.
By the end of February 2024, Capitec had 558 417 active policies issued on its own licence.
