Any South African is at risk of becoming temporarily or permanently disabled, but despite this, there’s still a pervasive feeling of ‘it won’t happen to me’. This poses a problem as the inability to earn is the single biggest financial risk a young person faces. But loss of income is not just a ‘young person’ problem – you can be affected at any stage of your working career, and your disability can be permanent.
Karen Bongers, Product Development Actuary at Sanlam Individual Life, advises laying a solid financial foundation to protect your earning ability from your very first salary, “In fact, protecting your income to mitigate risk such as a long-term inability to earn an income, is critical,” she says. Disability cover protects you against the inability to earn an income as a result of illness or injury, and against the costs of living with a disability even if you can still work.
Bongers lists some key points to ensure you are adequately covered:
- Feel like you can’t afford it? List your expenses and carefully prioritise each according to the impact these may have on your finances in the long term. What spending habits do you have that may compromise your financial well-being? Forego expensive luxuries and unnecessary purchases and rather make provision for your family’s financial security, like the inclusion of disability cover.
- While it’s ideal to have an adequate amount of disability cover in place, it’s wise to at least take some level of cover if affordability is a problem, as opposed to being completely exposed
- Don’t assume that disability is only linked to accidents. Heart disease, back disorders, cancer and depression are examples of conditions that can incapacitate people and have a devastating effect on their earning ability.
- Don’t assume that your employer offers disability cover. It is vital to ask whether an employer offers cover as part of your contract. Remember, group plans may also come with limited cover that isn’t personalised to your profile.
- Cancelling something like disability cover should be a last resort, as the absence of it can plunge you into serious financial strain should you be rendered unable to earn
- Don’t rely on your savings – a lifetime disability will place serious strain on your earning potential, and that’s if you are in fact still able to earn an income at all. Most people’s savings won’t stretch to cover their monthly expenses for even a relatively short period.
- It can be difficult to invest in something for the long term, but by making the right decisions early, you can financially secure your future
Bongers reiterates that disability cover should be a priority. She adds, “Sanlam has revamped its disability product range to be the most comprehensive in the market and to speak to the requirements of the modern-day client.”