Disability cover protects individuals in the event that they become disabled due to illness or injury. While it’s not something most people like to think about, life can throw unexpected circumstances their way, from illness to injury – and in South Africa, according to the Profile of Persons with Disabilities in South Africa report released by Statistics South Africa in 2014, it’s estimated that 7.5% of the population lives with a disability*.
“While insurance providers may vary in their definitions, occupational disability generally refers to a situation where individuals become permanently or temporarily unable to perform their usual job or any other career suited to their education, knowledge, training or experience. For example, losing both of your eyes, hands or feet, or if you suffer from a debilitating illness that prevents you from being able to work a normal job,” says Felix Kagura, Head of Long-Term Insurance Propositions at Standard Bank. In some cases disability cover also refers to an individuals ability to do handle their activities of daily living like eating, dressing using the bathroom etc. This is normally referred to as functional disability.
There are different types of disability cover available and consumers are advised to speak to a financial consultant to decide on the type of cover they may require should they become disabled.
“The level of cover individuals need depends on their personal circumstances. Are you single or are you supporting a family? Do you have debt that needs to be paid, and can you expect financial assistance from your family?” says Kagura
“Consumers should also ask themselves if they would be able to cover their current or future financial needs if they became disabled; would their family be protected if they couldn’t bring in an income; and would they be able to pay for any additional expenses related to the disability,” continues Kagura.
The answers to these questions give insight into what sort of cover and of what amount an individual would likely need.
“The amount of cover individuals qualify for depends on a number of factors like the individuals gender, age, health, income, lifestyle habits and education,” says Kagura. “Everyone’s insurance needs change over time – individuals may get married, buy a house or have children – and the cover they need now may not be sufficient in a few years’ time. Consumers need to be sure to review their policy regularly and apply for increased cover if they need to.”
Consumers are also advised to be aware of any factors that could affect future claims or monthly premiums. “If you change jobs, stop or start smoking, or take up a risky sport, let your insurance provider know as they may need to adjust your terms. On the plus side, if your lifestyle factors have improved, you could end up with better policy terms”, continues Kagura.
Lastly, as concerns payouts, consumers can decide between a cash lump sum payout, or a monthly payout. Both have their pros and cons, but a once-off cash lump sum payout can take financial strain off individuals and their family upfront and help to cover the costs associated with their new circumstances. For example, individuals could use this payout to:
- Make changes to their home or car to accommodate their needs
- Pay for specialist care or any bills not covered by their medical aid
- Purchase any equipment that may be needed, like a wheelchair
- Pay off debt like a bond or car loan
- Make investments that will provide individuals with a future income
“At the end of the day, the type of cover, the amount of cover, and payout option you choose depends on your personal circumstances. Speak to a financial adviser if you’re unsure” concludes Kagura.