Understanding disability cover
There are two broad categories of disability cover:
Occupation-based disability – Here you are offered a once-off lump-sum pay-out should you be injured or fall ill in a manner that prevents you from working at your current job and or any other jobs in your field of expertise. What’s important to note is that this benefit is offered whether due to injury or illness.
Event-based disability – In this instance you are paid a stipulated percentage of your salary to compensate for earnings lost. What’s different with this option is that it would need to include injuries that range from losing your hearing and sight, to being incapacitated by losing a limb or being wheelchair-bound.
Why do you need disability cover?
If you have family or are the breadwinner of a household where your salary is relied upon, this may be a necessary investment for you. This means that should you fall ill or be injured; your family will not suffer financially because of the provision that disability cover offers.
What’s important to note
Should you have a condition that you are aware of and have been diagnosed within two years prior to the policy, it may not be covered. This is known as a pre-existing condition or term and if not disclosed to the insurance company, it will most likely result in the claim being rejected.
It is vital that you as the policyholder understand that the responsibility to be honest and upfront with your information and your insurer lies with you. This is to ensure that your risk is correctly assessed, and you are correctly covered.
Questions to ask before you get started
- What do I need? It is important to establish your financial needs and to calculate the potential loss in salary that you will experience should you fall ill or be injured. This will help you determine if there is a need for this insurance, as well as the scale of the need. From that point you can then have the conversation of what you can afford to spend on such cover, keeping in mind that the spend affects the cover amount.
- What does my cover entail? Make sure you understand what the policy states and offers and ultimately what you are paying for. This will help you greatly should you need to claim, as you will not be subject to any nasty surprises.
- Is there a waiting period before the pay-out? This is a necessary question as it will help you manage expectations should it come time to claim. This will also enable you to financially prepare yourself should there be a waiting period and also to decide whether this is indeed the policy best suited to you.
- Am I getting the best price? It is always advised to shop around before taking the plunge. Understanding what is being offered across a range of providers and the prices are important when making the best financial decision for you and your family.