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Did you know that in South Africa you are nine times more likely to experience a temporary disability than to have your car stolen or hijacked?

The Association for Savings and Investment South Africa (ASISA) reports South Africa’s current disability insurance gap sits at R19.3 trillion. For those aged 30 to 39 (about nine million earners), there’s an insurance gap value of R1.5 million per earner. An insurance gap means the gap in what these people are insured for compared to what they should be insured for – it shows how underinsured we generally are as a nation.

While disability risk increases with age, Moneyweb reports that a 25-year-old still has an 86% risk of a temporary disability, with an 8% chance of becoming permanently disabled. In fact, 92% of people aged 25 to 32 are likely to experience a temporary disability rendering them unable to work for 14 days or more.

Nonkululeko Zungu, Product Support Consultant at Sanlam Individual Life, says: “Often people mistakenly associate disabilities with one-in-a-million freak accidents. However, it is frequently depression, diabetes, heart disease, spinal injuries, back and joint disorders, arthritis and bone fractures that incapacitate people. Depression is one of the biggest ‘unseen’ disabilities globally.”

Myths around disabilities

Disabilities come with a lot of myths and misunderstandings. The first step is to understand that disabilities can happen to anyone. The next step is to unpack the different types of income cover and which ones work best for your specific circumstances.

Myth 1: all employers offer disability cover

Nonkululeko says that one of the big misconceptions is that all employers offer disability cover. “Many employers do choose to provide risk cover – for example life, funeral and disability cover – for their employees, but this is not standard practice. It’s more common for bigger businesses than small ones. It is vital to never just assume but to always ask whether an employer offers cover and how to access this. Remember, group plans may also come with limited cover that isn’t personalised to your profile. Plus, any cover could immediately fall away should you leave your employer.”

Myth 2: you’re fully covered by workers’ compensation

In South Africa, ‘all employers, as well as casual and full-time workers, who as a result of a workplace accident or work-related disease are injured, disabled, or killed, or become ill’ are entitled to compensation, according to the Compensation for Occupational Injuries and Diseases Act. But, only in specific circumstances. To be covered by workers’ compensation, the causes of the disability must be work-related – which is frequently not the case. Think of cancer, heart attacks, diabetes, back pain and arthritis, which cause most long-term disabilities.

Myth 3: you’re covered by your savings

The average duration of a long-term disability is 31.2 months – but it can be for a lifetime. Most people’s savings won’t stretch to cover their monthly expenses for this long. The long and the short of it is that South Africans need to better protect themselves against disability risks.

“The long and the short of it is that South Africans need to better protect themselves against disability risks,” says Nonkululeko Zungu, Product Support Consultant at Sanlam Individual Life.

Four questions to ask before investing in disability cover

1. What will I be covered for?

You have to know what types of disabilities are covered under your policy. It is important that the benefit provides cover for occupational disability – in a nutshell, this means you can claim if a disability renders you unable to do your job. Most benefits also provide a payout for certain injuries and illnesses. Where this is the case, it will be disclosed in the policy documents. Ask your financial planner about these.

2. What will I not be covered for?

Ensure you’re aware of any exclusions on the benefit – circumstances under which you will not be able to claim. These can be generic to the benefit or specific to you and your lifestyle or medical history.

3. How much cover do I need and for how long?

  • Your financial planner will help you to determine the amount of cover you need, based on a range of factors like your income and age
  • Your cover should keep up with the cost of living or inflation. So, ask how the amount of cover will change over time.
  • Ideally, you want occupational disability cover to continue until you decide to retire
  • Some benefits allow cover for certain injuries and illnesses to continue post retirement

4. How much does it cost?

  • Ask your financial planner about the starting premium and how it may change in the future, so you can get an idea of whether you will continue to afford the cover over time
  • If you receive certain discounts from the insurer, ask whether these will continue to apply if your lifestyle changes. Will premiums increase? If so, by how much?

“It’s imperative that you explore your cover options and invest in being able to live your best life even if curveballs come your way,” says Nonkululeko. “When you’re young, disability cover is relatively affordable, with premiums that are small in comparison to the cover amount. It is best to speak to a trusted financial planner about which product suits your needs.”

Please consult with a financial planner before you take any action regarding your policies. Sanlam is a Licensed Financial Services Provider.

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