Capitec, South Africa’s largest bank by customer numbers, has warned of a widening Capitec insurance gap between funeral cover and life insurance. The bank said South Africans are largely overinsured on funeral cover, while many families continue to neglect life insurance, according to BusinessTech.
A 2025 Insurance Gap Study released by the Association for Savings and Investment South Africa found that the country’s life and disability insurance gap has widened to R50.4 trillion. The average South African income earner faces a shortfall of around R3.1 million in death and disability cover, and after the death of a breadwinner, the average household would need to cut spending by 34%, or roughly R7,400 a month, to remain stable.
Capitec said funeral cover has a far higher take-up rate among South Africans, with 24 million people holding some form of cover and 10.5 million holding more than one policy. Data from the Financial Sector Conduct Authority showed funeral cover is the country’s most commonly held insurance product, with the share of South Africans holding life insurance dropping to just 19% once funeral cover is excluded.
Capitec attributed the insurance gap to customers viewing funeral and life cover as interchangeable, despite their different roles: funeral cover eases the immediate financial burden of a death, while life cover provides ongoing stability for expenses that continue afterward, such as school fees and household costs. “Together, they tell a much bigger story: one provides support in the immediate moment of loss. The other provides stability for the life that continues beyond it,” Capitec said.
Deepesh Desai, chief executive of Capitec Life, said the industry needs to better communicate the purpose behind its products. “Our industry is good at talking about insurance products, but not nearly good enough at talking about the people whose needs these products were developed to protect,” Desai said, adding that understanding one’s cover leads to better decisions and stronger protection for dependents.
Capitec has expanded its insurance presence over the past decade, BusinessTech reported. It launched funeral cover in 2017, and Capitec Life was granted a life insurance licence in October 2022, consolidating the group’s insurance operations. Credit Life Insurance has been offered directly through Capitec Life since May 2023, with its book transferred from Guardrisk during the 2026 financial year via a section 50 transfer.
The group also introduced a simplified life cover product with flexible payouts, no medical requirements and no annual premium escalation, aimed at clients traditionally excluded from life insurance. In 2024, Capitec’s funeral reinsurance arrangement with Sanlam was terminated for R1.9 billion, with all new funeral policies now issued through Capitec Life. The report on the widening Capitec insurance gap comes as regulators pursue broader accountability across South Africa’s financial sector, including the FSCA’s recent crackdown on unlawful referrals and client data misuse.
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