Singer, fashion designer, actress, and businesswoman Rihanna’s legs are reportedly insured for $1 million. Rihanna’s legs are reportedly insured for $1 million. Madonna supposedly insured her bosom for double that.
It may seem eccentric for celebrities to insure their body parts, but this is about more than vanity. Rihanna’s elegant limbs and Madonna’s cleavage represent genuine future earnings potential. Without them, these artists would lose a lot of their image, and therefore their ability to continue to earn the money that they do.
It would also be wrong to think that this is a new phenomenon. Bette Davis reportedly insured her waist for $28 000 back in the 1940s.
It’s unlikely that in any of these cases, these women were approached by a broker trying to flog them an insurance product. The far more plausible scenario is that they proactively took the decision that insurance was something that they wanted.
What they realised is that any individual’s most valuable asset is their own ability to earn an income. If that is taken away by a shock event, the impact is inevitably going to be severe.
Yet, this is something that many South Africans are either oblivious to, or are prepared to risk. The latest South African Insurance Gap study published by the Association for Savings and Investment South Africa (ASISA) suggests that South Africans are severely under-insured, by as much as R34.7 trillion.
This is such a large number that it is almost impossible to appreciate. It is roughly seven times South Africa’s annual GDP.
To try to make this more meaningful, True South Actuaries and Consultants, which conducted the analysis, broke down South Africa’s population of income earners into five segments – from the lowest 20% of earners to the highest. It then looked at the average gap in cover in each of these groups.
The highest 20% of earners in South Africa are those earning more than R213 087 per annum. The average individual in this group is currently 42 years old and earns R619 859 a year.
According to the Insurance Gap study, this individual should have R4.6 million in life cover to ensure that their household will be able to maintain its standard of living if they were to pass away. On average, however, they have only half of that.