{
  "id": 13353563,
  "title": "Debt is squeezing South Africans – and creating an insurance dilemma",
  "url": "https://urgent.news/2026/10/10/debt-is-squeezing-south-africans-and-creating-an-insurance-dilemma",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-10T07:00:00.000Z",
  "source": {
    "name": "IOL",
    "slug": "iol",
    "url": "https://iol.co.za/business/economy/2026-10-10-debt-is-squeezing-south-africans--and-creating-an-insurance-dilemma/"
  },
  "original_language": "en",
  "account": "Financial strain is causing South Africans to make challenging decisions about their monthly budgets, with insurance coverage potentially becoming a casualty of the squeeze. As households grapple with debt repayments and higher living costs, some consumers are either cutting back on their insurance coverage or allowing policies to lapse, leaving them vulnerable to unforeseen events such as death, illness, or loss of income. According to DebtBusters' 2026 Money-Stress Tracker, 72% of its 18,000 respondents are experiencing money stress, up from 70% the previous year. Meanwhile, 53% are spending more than 40% of their take-home pay on debt repayments. The South African Financial Pressure Index (SAFPI), compiled by Debt Solutions 4 U from debt-review applications, reveals that the median applicant commits 58.4% of their net income to debt repayments before essential expenses such as rent, transport, food, and other living costs. A significant 56% are spending more than half of their income servicing debt. The SAFPI, while not representative of the entire population, sheds light on the financial pressures faced by individuals who have already sought debt assistance.\n\nActuaries and insurers are grappling with a dilemma, as growth in life insurance policies has been modest, with most sales occurring at the lower end of the market, focused on smaller and more affordable funeral policies. Yura Kaliazin, senior associate director for Actuarial & Insurance Solutions at Deloitte Africa, notes that the gap between the insurance South Africans have and what they need continues to widen. The Association for Savings and Investment South Africa echoes this concern, highlighting that the South African consumer is increasingly under-insured. Kaliazin warns that disposable income for insurance may become limited as economic conditions persist, with factors such as low growth, rising fuel prices, and exchange-rate uncertainties putting insurance premiums in direct competition with immediate household expenses.\n\nWhile a full-fledged exodus of consumers reducing or canceling insurance policies has not yet been observed, there are indications that lapse rates are on the rise. FNB Insurance, for instance, attributes higher financial pressure among households to factors such as higher living costs, fuel price fluctuations, exchange-rate pressures, and broader international uncertainties. These pressures have strained disposable income, making insurance premiums a competing expense alongside daily necessities like food, transport, debt repayments, and utilities. FNB's attrition data indicates that this trend is particularly pronounced among its Entry Wallet, Entry Banking, and Middle-Income customers during the six and nine months following policy initiation.\n\nHowever, there are signs of short-term relief. FNB's July collections saw a modest increase of around R20 million compared to June, with manual payments up by 19.2% month-on-month to approximately R4.4 million. Still, FNB's CEO, Himal Parbhoo, cautions that this improvement is based on a single month's data and does not yet signal a clear upward trend. Insurance professionals, such as Yazeed Adams from MiwayLife, advise that households may view insurance premiums as an expense rather than a safeguard when they are compelled to cut back on spending. He suggests that consumers are increasingly seeking guidance on adjusting policies rather than canceling them outright, which tends to be a more sustainable approach.\n\nDespite the financial strain, certain areas of insurance coverage remain underserved. Kaliazin points to dread diseases, critical illnesses, and disabilities as categories where South Africans are commonly underinsured. The full financial cost of these events is often underestimated, and consumers may struggle to estimate the necessary coverage to protect their families adequately. Parbhoo also highlights disability and critical illness as significant areas of underinsurance, stressing that a household's ability to maintain its current lifestyle after the loss of an income requires careful consideration of future expenses, including children's education, inflation, and ongoing household costs.\n\nThe data from Bidvest Life further underscores the issue of underinsurance. The insurer's 2024 claims data reveals that clients are 4.5 times more likely to file claims for income protection compared to critical illness lump-sum benefits, 15.3 times more likely for death benefits, and 43 times more likely for disability lump-sum benefits. Additionally, 52% of income-protection claimants have made previous claims. These statistics emphasize the critical need for consumers to assess their insurance needs beyond immediate debt obligations and consider the potential disruptions to their income due to unforeseen events.\n\nFor women, the impact of underinsurance can be particularly pronounced. Women composed 51% of Bidvest Life's income-protection claimants in 2024, with childbirth accounting for 19% of these claims. Homemakers, who often do not fit traditional income-protection criteria, also rank among the top 10 claimants under cover intended for specific occupations. Financial advisors should, therefore, move beyond a general wealth creation and retirement strategy and delve deeper into the specifics of how individuals earn their income, who relies on it, and how their career trajectories may evolve. By taking a more personalized approach to financial planning, consumers can better safeguard themselves against life's uncertainties.",
  "summary": "Rising debt and living costs are putting pressure on household budgets, with some South Africans reducing or allowing insurance cover to lapse.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 2,
    "also_reported_by": [
      {
        "outlet": "The Citizen",
        "title": "Proposed driver’s licence rule changes to affect South Africans and foreigners",
        "url": "https://urgent.news/2026/10/10/proposed-drivers-licence-rule-changes-to-affect-south-africans-and",
        "published": "2026-10-10T06:39:51.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}