Cover for domestics
According to Statistics South Africa’s latest Quarterly Labour Force Survey, more than 6% of working South Africans are domestic workers, and more people are employed in private households than in the mining and agriculture sectors combined. If their dependants are included, as many as four to five million people are supported by this industry.
However, until recently there weren’t many options for the average domestic worker to access simple, good value life insurance.
There are insurance companies targeting low-income clients, but the products are often for funeral cover only and are expensive relative to a domestic worker‘s salary.
Life tends to be risky and uncertain for domestic workers and their families. When a breadwinner becomes disabled or dies, the families are left without significant savings.
Research undertaken by the World Bank (2012), titled Insurance for the Poor, indicated that increasing the access of poor households to insurance can prevent them having to rely on publicly funded support from, for example, a safety net programme, to cope with shocks.
It can also encourage them to adopt more productive livelihoods (for example, planting higher-yield crops insured against the risk of drought) that can help to lift them out of poverty. Therefore, insurance should be regarded as an integral part of a social protection system.
To address these challenges, alternative insurance has come to the market, such as Simply Financial Services’ Domestic Cover, which is aimed specifically at employers of domestic workers and comprises life, disability and funeral cover. The policies are underwritten by Old Mutual Alternative Risk Transfer Limited.
Simply’s aim is to provide affordable life insurance for the mass market, and thereby contribute to a new level of financial security for people in this segment.
By putting the responsibility for paying the premium on the employer, the risk of cover being cancelled due to lack of payment is reduced. For employers, it provides a safety net for staff, without adding to their costs.