Let’s be honest. No one likes to think about permanent disability. About life in a wheelchair or coping without an arm or a leg. But the reality is that accidents do happen. According to actuarial models, 127 people in South Africa were expected to become permanently disabled every day in 2016. And permanent disability can mean financial ruin for many families.
When a breadwinner is disabled, and is either unable to continue working or must take a lower paying job, not only does the family suffer loss of income, but there are often additional medical and other unforeseen expenses. And of course, the family still needs to cover their regular monthly expenses. That’s why your family needs the protection of a disability insurance pay-out. However, according to the Association for Savings and Investment South Africa (ASISA), the majority of South African families don’t have adequate cover for death and disability and wouldn’t be able to maintain their current standard of living if a breadwinner became permanently disabled. In fact, households could have to cut expenses by as much as 30% following the permanent disability of a breadwinner!
How much cover do you need?
In deciding whether to take out disability cover, and how much, you need to assess the amount of income your dependants will need in the event of your no longer being able to provide.
Consider what it will cost to:
- Replace all or some of your income
- Cover monthly household expenses, including insurance premiums and your medical aid
- Settle your outstanding debt to reduce your monthly expenses and secure assets like your house and car
- Pay medical costs related to your disability not covered by your medical aid
- Provide for the future education costs of children
- Remodel your home or adapt your car to cater for your disability
1Life’s call centre consultants can assist you with a needs analysis or you can complete one online. A needs-analysis reviews your expenses such as mortgage, car payment, debts, savings and retirement to calculate what you would need in the event of a disability, and what you can afford. Call us on 0860 10 53 40.
Questions you need to ask before you buy
- Exactly what cover am I getting? Make sure you know the policy’s definition of disabled, as the definition may vary among underwriters. Disability by its nature can be complex, covering a multitude of ailments and injuries to individual body parts. Ask for an explanation of the fine print and make sure you understand what is being covered, and how it relates to your ability to perform your occupation.
- Is there a waiting period before cover commences or a pay-out is made?
- What is the insurer’s track record for paying claims? Research the insurer on Hello Peter and check their Facebook page. Ask friends and family for their opinion on providers as well.
- Am I getting the best price? Get comparative quotes from at least three different insurers – rates can fluctuate from insurer to insurer and you may be surprised at the difference. While it is important to be aware of the cost of cover, price is not the only consideration. Look at the benefits you are getting for that premium and remember that cheaper is not always better!
Buy when you are young & healthy!
Remember to buy your cover when you are young and healthy! It might seem unnecessary, but you might not be able to get cover once you already have an existing condition and the longer you wait the greater the chance of having your premiums loaded.
Insurers do pay claims!
When questioned as to why they are not adequately insured, people often say that they don’t believe that insurance companies will pay claims. Statistics from ASISA show that South African insurers paid R38 billion in claims to families impacted by a death or disability last year alone. When these claims are paid, families who have suffered a tragedy or misfortune at least have the comfort of knowing that they will be able to pay the bills each month.