“What are the chances it happens to me?” are the words we are all too familiar with. Illness, disease, and disability are uncertainties of life and they can affect more than just your health. Having the correct protection in place for these events will help you to manage the aftermath of expensive medical treatment and the ongoing costs associated with your condition. The major difference between dread disease and disability cover is that with dread disease cover you get paid out a tax-free lump-sum upon diagnosis of your disease even if you can work; whereas disability cover pays you a lump-sum or a monthly income only while you are unable to work.
Dread disease and disability – the 3 D’s that we all think we are immune to.
For part 3 of this series on the “Life’s 5 problems”, we will explore how you cover yourself if you were to suffer from a dread disease or become disabled. In fact – Did you know that 1 in 5 people will suffer from a serious illness at some point in their life and currently there are 2.8 million South Africans living with a disability? Dread disease and disability cover and the decision on whether to take out this kind of cover are burning questions for many people.
- Dread disease Vs Disability cover. What are they?
Dread disease cover is an insurance vehicle that will pay out a tax-free, lump sum payment in the event that you are diagnosed with a dread disease. The scope of cover ranges from cancers, strokes, heart attacks, Alzheimer’s disease and Parkinson’s amongst many others. You can either take out a standalone critical illness policy for those who do not require life insurance. Otherwise, you can have it as an add-on to your life insurance policy in the form of a term contract (which will cease when you are 65) or you can have it as a whole life which will cover you as long as you live and pay premiums.
Disability cover provides the policyholder with either a tax-free lump sum or a monthly income in the event that you become occupationally disabled (I.e., you are not able to perform day-to-day business tasks due to your disability). It will ensure that you continue to have an income even if you are no longer able to work. Disability cover is a proactive step in safeguarding your future financial well-being from the uncertainties life presents us.
- Do I need dread disease or disability cover and how much?
Dread disease and disability cover is often seen as non-essential cover – it can stand as a complementary benefit alongside your medical aid scheme and gap cover. Remember that medical aid only covers you for direct costs associated with your illness or disability. However, medical aid does not provide for the lifestyle adjustments many must make when they contract a severe illness. So, if you are wary about a certain condition that is prevalent in your family – you should consider dread disease cover.
These forms of cover can be quite expensive and especially when you consider individual health circumstances and personal finances, but you should get as much cover as you can afford. In general, the earlier in your life that you take out cover, the lower your premiums will be. Just be sure when applying for dread disease cover that you offer full disclosure to ensure you will receive a pay out in case you a severe illness.
Don’t fall into the trap of thinking you are immune to contracting a dread disease or becoming disabled. Speak to your financial advisor about the conditions you are worried about and see if they are covered and speak to them about the disability cover you can take out. The advances in medicine mean that people are living longer and typically survive illness which were once thought of as fatal. This means it is of utmost importance to ensure you will survive financially after the fact!
