Individuals are significantly underfunded when it comes to disability or income protection. This is partly due to a lack of understanding or certainty about when or how this cover works. Insurers are starting to innovate around these covers to improve coverage rates.
Making it easier to claim disability cover
This month life insurance provider BrightRock brought significant enhancements to its temporary disability and income protection benefit, which provides certainty to the amount you will be paid and allows the client to receive the benefits as an upfront lump sum rather than waiting for the monthly income.
The cover provides for 300 conditions which makes it the most extensive list of clinical conditions covered in the market and even includes pregnancy-related complications. Based on the clinical definition of the condition, BrightRock guarantees a stated payout period – even if the client is not booked off for the full duration. For example, if you fracture a major bone in your ankle, the clinical definition says you would be booked off work for two and a half months.
If you had a hip-replacement, you would be booked off for four months. If the policy has a month notice period, you are paid out the remaining months. In the case of a broken ankle you would receive income for one and a half months and for a hip replacement you receive an income for three months. Because this income is guaranteed under the clinical definitions, you can select a lump sum immediately rather than have the income paid each month. This can be beneficial to someone who might run their own business and needs to settle overheads while they are unable to work. BrightRock has added retrenchment as an event that will trigger the payment of temporary expenses.
If the client is still unable to resume work after the defined period, then this would fall under the sickness criteria for the usual temporary disability or income protection policy and be reviewed on a monthly basis. If the client’s proof of income was established at the time of taking out the policy, there is no requirement for proof of income at the time of the claim. These changes are applied automatically to all policyholders without a premium increase.
Insuring your side hustle
This month Liberty launched income protection for individuals with a dual income. “Due to the freelancing revolution, more flexible jobs and tough economic circumstances, people are working multiple jobs and earning money pursuing their hobbies and passions. It’s as if a whole new world of work needs to be insured in a different way,” said Kresantha Pillay, lead specialist: lifestyle protector at Liberty Group SA.
Liberty identified this as an income that the client is relying on each month, but which might not be insured under their current policy.
Previously, policyholders with two streams of income would have to have them insured separately which created extra admin and costs. Now this additional income can be added to your salary-based income in terms of your income protection. You must prove this income by providing tax returns and it must make up 20% or more of your annual income.
Should one become disabled and unable to work, it replaces up to 100% of your primary after-tax income for up to two years after the event that caused the temporary or permanent disability – which can be extended to retirement or beyond.
THE BENEFIT PAYOUTS ARE AS FOLLOWS:
- On temporary disability – 75% of the income is paid;
- On permanent disability – 100% of the income is paid: and
- After retirement – the percentage paid depends on the severity of the impairment.