By Zuko Komisa
Financially distressed consumers are cashing out on life savings to survive.
According to the Association for Savings and Investment South Africa(Asisa), more financially disadvantaged South Africans are cashing out their investments and savings and giving up their insurance policies in order to live as they feel the effects of the nation’s severe economic slowdown.
Kaya Biz with Gugulethu Mfuphi spoke to Hennie de Villiers, deputy chair of the Asisa Life and Risk Board Committee about a trend of consumers who are cashing out on life savings to survive.
LISTEN TO THE FULL CONVERSATION HERE:
According to Asisa, 8.4 million policies totalled 8.4 million lapsed, which happens when a policyholder ceases making premium payments for a risk policy with no fund value.
According to Asisa’s long-term insurance data, which were published on Wednesday, one million more recurring premium policies expired in 2022 than in 2021.
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De Villiers reveals that South Africa’s economy expanded by a less-than-expected 2% in 2022 and shrank by a significant 1.3% in the final quarter, which placed pressure on household disposable income and threatened the country’s already low employment rates.
Statistics show that 689 888 single-premium and regular savings policies were cancelled in 2022. Although this number was lower than in 2021, when 938 148 policies were cancelled, De Villiers said it is still alarming.
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