South Africans face a great disability risk from commuting in local roads and most face the risk of serious illnesses according to Albert Theyse of O’Keeffe & Swartz. These risks have an adverse implication in the population’s finances, this will be hardly felt in the low income group of the populations. As a result, this makes affordable insurance an important tool for the low income group in South Africa because they face the greatest income and health risk among others.
Historically access to income and healthcare insurance in South Africa has been limited for the low income group, largely due to the cost of purchasing such insurance products. ” Bancassurance is an easily accessed and trusted distribution channel, the products are simple to understand and in most instances require no costly underwriting”, explains Albert Theyse. According to the definition on Investopedia, bancassurance is an arrangement in which a bank and an insurance company come form a partnership which allows the insurance company to sell its life insurance products to the bank’s client base. Banks can earn additional revenue by selling the insurance products, while insurance companies are able to expand their customer base without having to expand their sales forces or pay commsission to insurance agents or brokers. By using bancassurance insurance companies will ensure that consumers now have access to affordable insurance, simple and low premium products.