Knowing what you can benefit from disability cover, not only for yourself but loved ones with a disability too, is very important.
By: Boitumelo Mmakou
Certified financial planner Bruce Fleming explores the parts disability and dread disease covers play in your overall financial portfolio.
1.THE LUMP SUM DISABILITY
This cover should be an important consideration. However, the cover should not be seen as replacing income protection, which is there to replace your lost income as a result of your disability. It assists with the funding necessary to make lifestyle adaptations. Lump sum disability should, therefore, be used to supplement your income protection and not to substitute it.
2. HOW IT WORKS
Bruce says lump sum disability cover is paid out as a single payment, or part thereof, depending on the severity or duration of the disability of the disability, whether permanent or temporary.
3. THE DREAD DISEASE COVER
This will also pay out a lump sum , or part thereof, in the event of a dread disease, depending on the severity. “What you need to be careful of, however, is what it pays out for. Most insurers’ cover the common three dread diseases – cancer, heart attack and stroke – while others cover significantly more,” Bruce explains.
“Risk products have not yet been included in the Retail Distribution Review (RDR), so life companies are still paying commission to “brokers” for selling their product.” It is therefore important for you to look at the advice given, the reason for the cover, how comprehensive the cover is and why they are using a particular life company for it.
5. BASIC COVER
This is not advisable. You should always ensure that you are sufficiently covered for your needs and never underinsure yourself as this cover is paid out when you need it the most. It might be heavy on your pocket but worth it in the end.