There are many people who do not think twice about insuring assets such as their home or motor vehicle but neglect to insure their most important asset – themselves. Becoming disabled through injury or sickness or suffering from a severe illness (often called a dread disease), could be your greatest financial risk. Such an event could result in your not being able to work and earn an income to support yourself and your loved ones.
If you have disability cover and become disabled, you will either receive a monthly payment (income protection) or a lump sum payment (capital disability), depending on the type of cover you have. Your claim will be approved if you are unable to perform your occupation or any other work for which you are suitably qualified in terms of skill, training, and education.
Severe illness cover is structured to pay you a lump sum in the event of your being diagnosed with a stipulated severe illness. The test is not if you are able to perform your duties at work, but rather the medical diagnosis of a particular illness by a qualified practitioner. Four conditions – cancer, heart attack, stroke and coronary artery bypass graft – account for the vast majority of severe illness claims, but policies usually cover a wide range of other illnesses including diseases such as Alzheimer’s and Parkinson’s, as well as injuries from accidents resulting in blindness, paraplegia, major burns and brain damage.
The payment you receive from a severe illness claim can be used for anything you choose, such as paying for specialised cancer treatment to hiring a caregiver at home or even going on an overseas holiday. You may find recurring costs related to the illness and might have adapt your living environment and make other lifestyle changes. Your medical scheme will usually cover a portion of the cost of your treatment for severe illnesses, but it may have annual limits and may not cover the full cost of certain specialist treatments. Medical Aid schemes usually do not pay for certain home care treatments, assistive devices or for someone to take care of your children while you are incapacitated.
Disability cover and severe illness cover work hand in hand. In certain circumstances, you may qualify for a disability claim but not for a severe illness claim. Alternatively, you may be diagnosed with a qualifying severe illness which does not affect your ability to work and earn an income. The products offered by the various life assurance companies vary greatly and an experienced Certified Financial Planner will be able to assist you to choose the type of cover that is right for you and your family.
Life has a habit of springing unexpected surprises on us and no one can predict what is going to happen in the future. Just as life cover eases the pain and discomfort for your dependants in the event of your death, so disability cover and severe illness cover make it easier for you to cope with the difficulties associated with living with these challenges.
- Rands and Sense is a monthly column, written by Ross Marriner, a CERTIFIED FINANCIAL PLANNER® with PSG Wealth. His Financial Planning Office number is 046 622 2891