Insurance basics · Quick answer
Short-term vs long-term insurance: what’s the difference?
South Africans still say short-term and long-term, but the law now calls them non-life and life insurance. Here’s what separates the two, where common products sit, and why it matters when you buy, cancel or complain.
The difference between short-term and long-term insurance
Short-term insurance compensates you for a loss. Long-term insurance pays a benefit when a defined event happens to a person. The Insurance Act draws the line this way:
- Non-life (short-term): an arrangement under which the insurer “fully or partially indemnifies loss on the happening of an unplanned or uncertain event”, other than a life event, or a death or disability that isn’t caused by an accident.
- Life (long-term): an arrangement under which the insurer meets obligations on a life, health, disability or death event, or on or from a fixed date.
| Short-term (non-life) | Long-term (life) | |
|---|---|---|
| What it protects | Vehicles, buildings, contents, business assets, and liability to others | A person’s life, health and ability to earn |
| How a claim is paid | Indemnity: the loss is put right, up to the sum insured, after the excess | A benefit, usually an agreed amount or income, when the insured event happens |
| Typical products | Car, home, buildings, business, liability, travel, personal accident | Life cover, funeral, disability, dread disease, credit life, annuities |
| Cooling-off period | 14 days to cancel a new policy (term over 31 days, no claim) | 31 days to cancel a new policy (term over 31 days, no claim) |
| Ombud division | NFO Non-life Insurance | NFO Life Insurance |
Because short-term cover is indemnity, it brings in ideas like the excess, the sum insured and the average clause. Our guide to underinsurance and the average clause shows how those can change a payout.
Short-term and long-term insurance examples
Most products fall clearly on one side, but some that sound like “life” products are legally short-term. Schedule 2 of the Insurance Act lists the classes of each, in Table 1 for life (2017) and Table 2 for non-life (2017):
| Life (long-term) classes | Non-life (short-term) classes |
|---|---|
| Risk (death, disability and health benefits) | Motor, property and agriculture |
| Funeral | Liability, legal expense and guarantee |
| Credit life | Transport (goods in transit), marine, aviation and engineering |
| Life annuities and income drawdown | Accident and health, including death or disability caused by an accident |
| Individual and fund investment | Travel, trade credit and consumer credit |
The accident and health class is why personal accident cover, which pays if someone dies or is disabled in an accident, can be short-term insurance. Travel insurance is short-term too. Health insurance products that overlap with medical schemes are governed by separate demarcation rules. The Council for Medical Schemes has extended the current exemption framework to 31 March 2027 (CMS Circular 9 of 2025).
Test yourself: short-term or long-term?
Four products. Pick the side each one sits on under the Insurance Act.
Why the difference matters to you
The two types sit under different rules for cancelling, complaining and getting advice.
Cooling-off periods differ
Under the Policyholder Protection Rules, you can cancel a new short-term policy with a term longer than 31 days within 14 days of receiving the policy, if nothing has been claimed (Short-term PPR 4.2 (2017)). For long-term policies the period is 31 days (Long-term PPR 4.2). Premiums paid are refunded, less the cost of any cover you actually had (and, for long-term policies with an investment element, any market loss) (PPR 4.3).
Complaints go to different divisions
The National Financial Ombud Scheme started on 1 March 2024. It replaced the separate short-term, long-term, banking and credit ombuds, and it has a Non-life Insurance division and a Life Insurance division (NFO). Complaints about the advice you received from a financial services provider go to the FAIS Ombud. Our guide to escalating a rejected claim explains the process.
Advisers are licensed separately
Financial advisers and brokers are authorised for specific product categories, so a short-term broker isn’t automatically licensed to advise on life cover, and the reverse. You can check an adviser’s categories on the FSCA’s register of financial services providers.
Both sectors are regulated by the Prudential Authority for financial soundness and the Financial Sector Conduct Authority for how customers are treated. The two differ in scale: life insurers managed R5.2 trillion in assets at the end of 2025 and paid R626 billion in claims and benefits during the year (ASISA, March 2026). The market is also split across many companies: KPMG’s 2025 insurance survey covered 28 non-life insurers, 16 life insurers and four reinsurers, together about 85% of South Africa’s insurers (KPMG (2025)).
Short-term vs long-term insurance FAQs
General answers about how insurance is classified in South Africa.
What is the difference between short-term and long-term insurance?
Short-term (non-life) insurance indemnifies loss or damage to property and liability to others, such as car, home and business cover. Long-term (life) insurance pays benefits on events linked to a person, such as death, disability or illness, or on a fixed date.
What are examples of short-term insurance?
Car, buildings, home contents, business property, liability and travel insurance are common examples. They compensate you for loss or damage to things, or for your legal liability, which is why the Insurance Act classes them as non-life insurance.
Is funeral cover short-term or long-term insurance?
Long-term. Funeral is one of the life insurance classes in Schedule 2 of the Insurance Act.
Is personal accident cover short-term insurance?
It can be. The non-life accident and health class covers death or disability caused by an accident, so personal accident cover can be written as short-term insurance.
Why is it called short-term insurance?
Short-term policies are usually renewed monthly or annually, with the cover and premium reviewed each time. The older Short-term and Long-term Insurance Acts used these names, and the Insurance Act 18 of 2017 now uses non-life and life.
How long is the cooling-off period on a new policy?
Under the Policyholder Protection Rules, 14 days after receiving the policy for a short-term policy with a term longer than 31 days, and 31 days for a long-term policy, provided nothing has been claimed.
Where do I complain about a short-term or life insurer?
The National Financial Ombud Scheme handles both, through its Non-life Insurance and Life Insurance divisions. Complaints about advice from a financial services provider go to the FAIS Ombud.
Short-term cover for home, car and business
Questions about cover for your car, home or business? Contact Best Care. Cover remains subject to underwriting and the final policy documents.
This article is general education, not personal financial advice. Product classification and policy terms depend on each insurer and policy wording. Legislation and rule references are as at the dates shown. Best Care Insurance Brokers CC, registration 1992/100995/23, Authorised FSP 8754. See the FAIS disclosure.