South Africa’s working population remains dangerously underinsured against serious illness, according to the 2025 ASISA Insurance Gap Study, which found that the country’s 16.1 million formally employed income earners collectively generate about R4 trillion a year – yet have only R1.1 trillion in critical illness cover. This equated to a coverage ratio of only 26% at the end of 2024, highlighting a significant protection shortfall.
The latest study, released by the Association for Savings and Investment South Africa (ASISA) in partnership with True South Actuaries and Consultants, introduces an assessment of critical illness coverage for the first time since its inception seven years ago. Conducted every three years, the ASISA Insurance Gap Study measures the shortfall in life and disability insurance in South Africa.
Presenting the findings, Besa Ruele, a member of the ASISA Life and Risk Board Committee, said the study adds a vital perspective on the country’s financial resilience.
“It does give us a sense of just how well our society is protected from the events that are covered, and the numbers are staggering. They’re sobering … they are sort of an indicator of exactly what work it is that we need to do as life insurers, and also the work that perhaps our consumers can do with some indication of what the possibilities could be given the size of the gap,” she said.
A major protection gap
Actuary WS Nel (pictured), research lead for the 2025 Insurance Gap Study, said that more than 85% of South Africa’s income earners do not have any critical illness cover. Actuarial estimates suggest that more than 24 000 formally employed South Africans will be diagnosed with a critical illness such as cancer, heart attack, or stroke in 2025.
Nel explained although it is possible to calculate the shortfall for life and disability insurance, the same cannot be done for critical illness cover because it does not always result in a complete loss of income.
“Those affected are often still able to return to work and continue to earn an income,” he said, noting that the financial impact depends on each person’s medical expenses, recovery period, and lifestyle changes following illness.
Critical illness cover is designed to provide a lump-sum payout when an individual suffers a serious health condition, helping to bridge financial gaps caused by treatment costs, shortfalls in medical scheme cover, or income loss during recovery.
“It provides liquidity during recovery from a serious illness to mitigate the financial impact of lifestyle adjustments or treatments not covered by medical aid,” said Nel.
A legacy of innovation
South Africa was the first country to introduce critical illness products in the 1980s, following an idea by Dr Marius Barnard, brother of heart transplant pioneer Dr Christiaan Barnard. He persuaded a small life insurer to design a product that would reduce the financial burden faced by people surviving serious illness.
Despite this pioneering history, the 2025 study shows that critical illness remains the least-covered risk, even though it is one of the most common.
“Most of us know someone who’s had cancer or a heart attack, but few personally know someone who’s been rendered permanently disabled,” Nel remarked.
Unequal protection
According to the study, the level of critical illness coverage is closely tied to income and education levels. The wealthiest 20% of earners have an average coverage ratio of 31%, while individuals with university degrees are the most likely to hold a critical illness policy.
ASISA data also shows that the range of illnesses covered varies between insurers. However, the “big four” conditions – heart attacks, cancer, strokes, and coronary artery bypass grafts – account for more than half of all claims. These are standardised under the ASISA Standard on Disclosures for Critical Illness Products, introduced in 2009 to improve transparency and help consumers to compare products more easily.
A call to close the gap
For financial advisers, the findings underscore the need for proactive client education and holistic risk planning. Although life and disability cover often dominate insurance discussions, the study highlights that critical illness protection may be the missing piece in many financial plans.
The insurance industry has an opportunity to guide clients towards understanding the financial impact of serious illness – and the role that adequate cover can play in ensuring recovery without financial distress.
“For consumers, perhaps the study can serve as a prompt, of course, depending on how we use it for education, to assess. The prompt to say, let me go and sit down and have a look at what my cover adequacy looks like,” said Ruele.
