Life Cover
Life insurance can help to give your family dependants years of financial security.
After your death it pays them out to help them survive financially without you.
We help you identify your needs based on life's challenges and opportunities in the key stages of your life.
Disability Insurance Cover
Vital to Ensure Self-Reliance
Disability insurance cover protects your most valuable asset - the ability to earn over an extended period of time.
If this ability is cut short or restrict, either through disability or
through impairment, you may need to ensure that you have cover to meet
your financial requirements. This does not only apply if you have
dependents. It is as important if you have no dependents, as this
enables you to remain financially independent of others, thereby
maintaining your dignity.
It is necessary to distinguish between impairment and disability.
Impairment implies a physical or functional disorder, but does not stop
us earning an income. Your ability to earn may be impaired, but
not completely stopped. Examples of impairment may be the loss of
a limb or the loss of eyesight. Disability, on the other hand,
implies an inability to earn an income.
The modern disability insurance cover often incorporate both disability
and impairment cover. If you are impaired, you would receive a
percentage of the insured amount. This information is included in
the details of the policy, and outlines the percentage payable per
impairment and usually increases with the severity of the impairment.
There are three forns if disability insurance cover namely
- Own Occupation Disability
- Occupational Disability or
- Total Disability.
With Own Ocupational Disability, you are covered if you are unable to perform your current nominated occupation.
If you have Occupational Disability, you would be covered if you were
unable to perform your nominated occupation, or a similar
occupation. To illustrate by means of example, if you were a
heart surgeon, and you lost a hand, with Own Occupation Disability you
would be fully covered and paid out, as you can no longer
operate. Under Occupational Disability, you woiuld not be paid
out, because you could become a General Practioner. Own
Occupational Disability is therefore a better option, especially for
professionals in a specialised field, but this does come at an
additional cost.
With Total Disability, you would only be covered if you were unable to work at all.
Two Forms of Disability Insurance Benefit -
Monthly (Income Protection) and Capital (Lump Sum) Benefit
income protection may comprise either a permanent or a temporary benefit..
With permanent income protection, benefit payments will usually
continue from date of disability until age 60 - 70. The level of
cover is usually limited to 75% of your latest taxable
income. The 75% applies in aggregate, meaning multiple policies
may not, in total exceed 100% of your present income. With
temporary income protection, benefit payments do not normally exceed
two years. The level of cover may not exceed our latest taxable
income. This too applies in aggregate. As this cover is so
important, the government does allow the tax deduction on your
contributions.
Income protection premiums vary greatly between products, both within a
particular assurer and across different assurers. These products
need to be tailored to our personal requirements.
Some key points that you should consider:
- What is the waiting period before a disability
insurance benefit commences? You need to ensure you have
sufficient funding of your own to cover this waiting period. As
is to be expected, the longer the waiting period the lower the premium.
- When assessing the validity of a claim, will the
assessment use your current occupation only or will it assess any
occupation for which you are quilified? This may affect whether
you get paid out for a claim or not, or whether you will be required to
re-train for a smililar occupation.
- Will the disability insurance benefit escalate
annually? If it does not, inflation will impact negatively on our
benefit payment over time.
- To what age will the benefit continue? Options may vary from age 55 to age 70.
With a capital or lump-sum benefit, an assurer will pay out a lump sum
if you are deemed to be permanently disabled or permanently unable to
earn an income. Capital disability cover should not be used to
replace lost income. It should be used to settle debt and help
with lifestyle adjustments that are required as a result of your
disability. Examples would be to settle the bond or make
modifications to your home or vehicle to assist your disability.
Should you have Disability Insurance Cover?
The answer is clear. If you earn an income, or are going to be an
income earner, then you should have some form of disability
cover. Your ability to earn an income is your most valuable
asset, and is likely to be the driving force behind the accumulation of
any other assets over you working life. It is imperative that you
provide cover in the event that this earning ability is impaired.
How much disability cover you need is dependent on your personal
requirements and current financial affairs.
A Certified Financial PlannerŪ professional should take you through a
disabilty insurance scenario to assess the appropriate levels for
income protection as well as capital disability.
Contact us: E-mail: cobans@mweb.co.za Tel: +2712 653-4153 | Fax: 086 684 3231
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