Innovation by smaller companies is leading to the introduction of investment products and life cover designed for the traditionally underserved lower end of the market. While the big insurers have been providing basic funeral cover to low-income earners, these smaller players are now offering value-added products that the traditional players had only offered to middle-and high-income earners. A few of the smaller insurance groups, such as Hollard and Assupol, have started offering underwritten life cover. Funeral cover, the form of insurance that has dominated products sold to low-income households, has profit margins of about 5%, whereas underwritten life cover has halved this to 2%-2.5% says Hollard CEO Saks Ntombela.

"It’s essentially making life insurance more affordable for these consumers than it was before, but unfortunately we aren’t seeing the uptake we expected. People don’t want to disclose their medical information because they think we’ll use it against them in fu...

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