Insurance

Disability needs an attitude change!

Seven and a half per cent of South Africans have disabilities, says Stats SA in an in-depth report on persons with disabilities. Despite this, there is an inevitable feeling of ‘it won’t happen to me’. This presents a problem, especially for young people as the inability to earn is the biggest financial risk they face.

The Association for Savings and Investment South Africa (ASISA) reports South Africa’s current disability insurance gap sits at R19.3 trillion. In the case of people aged 30 to 39 (about nine million earners), these gaps are by about R1.5 million per earner. While disability risk increases with age, Money web reports 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.

People often mistakenly associate disabilities with a one-in-a-million freak accident. However, it is frequently depression, diabetes, heart disease, spinal injuries, back and joint disorders, arthritis and bone fractures that incapacitate people.

Changing one’s mindset from ‘it won’t happen to me’ to ‘it probably won’t happen to me, but I need to prepare for every eventuality’ is a big shift, especially when you’re young. Disabilities are usually misunderstood. It would be worthwhile to consider the following three steps before taking disability cover: The first step is to understand that disabilities can happen to anyone. The next step is to unpack the different types of cover and lastly, which cover works best for each person’s specific circumstances.

Questions to ask before investing in disability cover:

For what will I be covered?

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

How much cover do I need and for how long will I need it?

Your intermediary will help you 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.

How much does it cost?

Ask the intermediary about the starting premium and how it may change in the future, so you can get an idea of whether you will still be able 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?