There are a number of insurance policies designed to insure and protect low-income workers.
What would happen to your domestic’s family is she fell ill and could not work for a few months? Who would support them if she passed away? Would you, her employer, be in a position to provide ongoing assistance to the family members who rely on her income? The answer is probably no.
The good news is that there are a number of insurance policies designed to insure and protect low-income workers. It’s worth discussing these options with your domestic worker – it may well be in both your interests. You might even consider paying part of the premium as an employment benefit.
These are the types of products that you could consider:
Life insurance will provide your employee’s dependants with a payout should the employee pass away. Since many domestic workers in South Africa are supporting both their children and their parents, a payout like this can prevent financial ruin after the loss of a breadwinner.
While high-end medical aids for a family of four usually cost more than a domestic worker’s entire salary, there are some options available for low-income earners. While they won’t cover hospitalisation at a private hospital, they will provide help in a medical crisis.
For example, DomestiCare from Old Mutual costs R2 300 a year or R238 per month, and covers your employee for network GP visits, pathology, radiology, pregnancy scans and antiretroviral treatment. DomestiCare Plus, which comes in at R2 555 a year or R265 per month has additional dentistry and optometry benefits.
A hospital cash-back plan is not a medical aid, but rather an insurance product that provides cash back for each day that the policyholder spends in hospital. There are many such plans on the market, and the entry level products are ideal for domestic workers, who stand to lose income if they spend an extended period in hospital. This also gives them the option of using their cover to pay for private care or treatment.
The Bonitas Premium Care product starts at R275 per month, and pays between R1 000 and R5 000 per day of hospitalisation, after the first two days, depending on the type of policy.
The costs of burying a loved one can be steep, and family members will often borrow money to fund the funeral, placing them in an ever more precarious financial position. A 1Life funeral policy pays out between R50 000 and R100 000 per member, with premiums starting at R90 per month. Up to five children and ten family members can be included per policy.
Although low-income earning domestic workers are entitled to a state pension , at a maximum of R1 500 a month (provided certain other criteria are met), that’s not enough to keep a family comfortable in retirement. You can help your domestic worker by signing him/her up to a provident fund.
Absa’s Small Business Provident Fund (although you, as the employer, don’t have to be a small business) is aimed at low-income employees, with contributions starting at R214 per month. Since it’s a provident fund and not a policy, it pays out the lump sum invested plus returns on retirement (starting at age 55) or when your employee stops working for you.
It is unlikely that you or your domestic worker will be able to afford the full range of products that we’ve outlined here. With her and your broker, discuss her priorities and plan a suitable spread of policies. Note that many of the products have overlapping benefits, so carefully read all the policy information to be sure that you are not paying twice for the same benefit twice.