Disability cover is designed to safeguard you financially if you become permanently disabled due to illness or injury. How? By paying you a tax-free cash lump sum that you can use to settle your home loan, pay for bills not covered by your medical aid, or cover living expenses. Here's a closer look at this long-term insurance product.
1. Why should you consider it?
If you don't have disability cover in place, it's worth asking yourself whether you'd be able to support yourself and your dependents financially if you became disabled. Bear in mind that a permanent disability not only means an end to your ability to earn an income, it can also mean additional costs as you adjust to your new situation. For example, you may need to buy specialist equipment like a wheelchair. Being paid out a cash lump sum when you need it most can take the financial strain off you and your family and help cover the expenses associated with your new circumstances.
2. What constitutes a permanent disability?
The definition of a permanent disability may vary from insurer to insurer. But it typically refers to a situation where – due to illness or injury – you become permanently and totally unable to perform your usual job or any other career suited to your education, knowledge, training, or experience.
3. How much cover do you need?
Have a look at your financial situation and consider how much cover you would need to support yourself and your family if something had to happen to you. And remember to include current and possible future expenses like bond repayments, education costs, and so on. It's important to know that the amount of cover you'll qualify for is dependent on several factors, including your gender, age, health, income, lifestyle habits and education. Finally, once you have your policy in place, it's a good idea to review it regularly to ensure that it still meets your needs.
4. Honesty is the best policy
When you apply for disability cover, your insurer will take you through a risk assessment, where you'll be asked questions about your health, lifestyle, medical history, family history and more. It's important to answer these questions honestly and not withhold any relevant information. Why? Because if you submit a claim in the future, your insurer will want to verify the information you provided in your application – and if you've lied about anything or withheld important information, your claim may be rejected, and your policy may be cancelled.
5. Keep your insurer informed
Remember to tell your insurer about any significant lifestyle changes as they could impact your policy and premiums. Important changes include: If you take up a high-risk sport or hobby, get a new job, stop or start smoking, or if you're planning on travelling to a high-risk area.
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