Your Greatest Asset: Income Protection
We often over-insure our cars and our lives, but underestimate the one thing that pays for it all: our ability to earn an income.
Did You Know?
In South Africa, you are nine times more likely to suffer a temporary disability than to have your car stolen or hijacked. Statistics show that 70% of people will experience an illness or injury during their working life that prevents them from earning an income.
“Income protection is a long-term insurance policy designed to replace or supplement your earnings if illness or injury keeps you from work.”
Strategic Considerations
The Quantum of Cover
Most insurers allow you to protect 50% to 100% of your net salary. Ensure this covers bond repayments, living costs, and continued retirement savings.
Waiting Periods
This is the time before a claim pays out (7 days to 6 months). Long waiting periods reduce premiums but require a larger emergency fund to bridge the gap.
Tax Advantage
While premiums are no longer tax-deductible in SA, the actual monthly income paid out during a valid claim is generally tax-free.
Own vs. Any Occupation
How your disability is assessed is the most technical part of your policy:
- Own Occupation: Pays out if you cannot perform your specific professional role (ideal for specialized professionals).
- Own or Similar: Pays if you cannot do your current job or a similar role you are reasonably qualified for.
- Any Occupation: Only pays if you are unable to perform any job at all. This is the strictest definition.
Cover for the Gig Economy
The insurance landscape has evolved! Freelancers, contractors, and those with “side hustles” can now access protection for multiple income streams, provided they meet minimum earning percentages. Even maternity income protection is now an available enhancer.
“Protecting your income ensures your financial plan doesn’t collapse when you’re most vulnerable.”
Don’t leave your standard of living to chance.
Provided by: Sue
