This is how having disability insurance might help you during the pandemic

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SPONSORED: In the age of Covid-19, the old saying “It won’t happen to me” no longer carries much weight. Young and old have been affected by the pandemic according to Old Mutual’s latest Claims Statistic Report. So, don’t be caught off guard – protect your pay cheque and review your disability cover.

The pandemic has highlighted the financial vulnerability of many South Africans, and with a lagging vaccination programme and a resurgent third wave, Covid-19 is far from over.

An increase in claims

According to Old Mutual’s Claims Statistics Report 2020, there has been a significant rise in the number of disability income claims year-on-year, as well as a 3,5 times increase in sickness income claims under the disability insurance category.

The highest cause of sickness income claims was ‘infectious diseases’, under which Covid-19 falls.

Despite the increase in disability income claims and growing concerns about health, many South Africans don’t have disability insurance, says Priya Naicker, head of strategic retail marketing at Old Mutual.

“Traditionally, when people think of disability insurance, there is a common misperception that it applies only to those working in dangerous industries or in high-risk jobs,” she says.

“However, this couldn’t be further from the truth. Disability insurance is for everyone. It means being able to help cover the costs that come with being disabled and unable to work or take care of yourself because of an illness or injury.

“It also lets you carry on providing for yourself and your loved ones, preventing you from becoming a financial burden on someone else.

“In the context of those suffering from Covid-related health issues for extended periods of time, disability insurance can help you and your family to maintain monthly obligations without financial stress, which is critical for a smooth recovery.”

Why younger people need cover too

The Insurance Gap Study 2019 by the Association for Savings and Investment South Africa found that the total existing shortfall in disability insurance was a staggering R19,3 trillion – that equates to R1,2 million per average South African earner.

And this gap is substantially wider for earners younger than 40.

Naicker explains: “While younger people rarely think about dying or becoming disabled or even see the need for disability insurance, it’s actually younger people who are more adversely affected by disability because they have not had as much time to accumulate wealth and create a financial buffer.”

The latest Claim Statistics Report shows that the average age of disability claimants sits in the family provider age group: the average age for men is 47 and for women, it’s 43.

Yet, within the claims category for infectious diseases and trauma and lifestyle, which was the most prevalent cause for claims under sickness income, the ages 20-30 and 30-40 each accounted for 36% of sickness income claims.

You should get cover that suits the life stage you’re at, Naicker advises. “Not having disability insurance only increases your risk of going into debt, which could have serious consequences on your future financial security.

“It could mean risking your home, your car and the ability to continue with your retirement or even shorter-term savings goals. For those with families, it may affect parents’ ability to fund their children’s education.”

Younger South Africans may question whether they need disability insurance, or whether they can afford it. “A more pertinent question may be to ask whether they can afford not to have it,” Naicker adds. “It’s important that we don’t underestimate the value of disability insurance and the role it can play in protecting your future and the financial wellbeing of your family.”

Insights from the Old Mutual Claim Statistics Report 2020:

  • Sickness income claims within the disability insurance category increased 3,5 times in 2020.
  • There was a 25% jump in the pay-out amount for disability income claims.
  • Most disability income claimants fell between the ages of 30 and 55.

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