RIAAN VAN REENEN: Another pandemic is probable, so keep your insurance policies

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With the evolution of both present and future health risks, keeping your life insurance policy has become more important than ever

The Sars-CoV-2 virus is likely to become something we are going to need to live with for the foreseeable future. That we are unlikely to completely stamp out the virus in the near term is due in large part to how very contagious it is. This means that to eradicate the virus, we mathematically estimate that in the region of 90% of the world’s population would need to be protected against it at any point in time through a combination of vaccinations and naturally acquired immunity.

Fortunately, as long as we can keep vaccination rates at a high level, the proportion of the population that is likely to be affected by the virus at any time could considerably reduce, and the disease could be well managed without overburdening healthcare infrastructure. It is also encouraging to see potentially effective medications emerging to treat acute Covid-19. Drugs from both Merck and Pfizer are already showing incredible potential.

The immediate implication of this is twofold: we envision that continued vaccinations could become necessary for a longer period, much like with the seasonal flu, and that we have a new health and mortality risk factor for the foreseeable future. This being the case, there are some key factors to keep in mind as we progress towards the “new normal”.

With the evolution of both present and future health risks, keeping your life insurance policy, especially if it provides a comprehensive set of benefits such as income continuity in the event of illness, has become more important than it ever used to be. The cost of protection cover is likely to increase following the greater risk and uncertainty highlighted by the pandemic. Premium guarantees embedded in a life insurance product have also become more relevant and valuable.

 

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