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YOU LIFESTYLE

YOUR WHAT HAPPENS IF I

MONEY CAN NO LONGER WORK?

SORTED Eight questions about income-protectionpolicies
p
p

4 PREMIUMS
BYLETITIAWATSON
Send suggestions for topics and requests for info to yourmoney@you.co.za.
We may answer your questions in this column but won’t reply personally. DO ONLY THE

HAT’Syourmostvaluableasset?Isityourhouseor INCREASE OR
THE BENEFITS
yourcar?Theanswermostprobablyisneither.For
mostpeopleit’stheabilitytoearnanincome.That’s AS WELL?
becauseifyoucan’tworkandearnmoney,chances Premiumsusually increase annual-
W areslimyou’llbeabletomaintainyourlifestyle,which ly,butit’simportant that the bene-
meansyou’llprobablyhavetosellyourpropertyandvehicle. fits you’re entitled to when claim-
ing should increase too. The
Thisiswhyincomeprotectionisoneofthefirstpoliciesyoung benefits should at least keep pace
workingpeopleareadvisedtoget.Thesepoliciesareaimedatreplac- with inflation so the buying power
ingorsupplementingyourincomeifyoucan’tworkbecauseofillness, ofthemoney you get out is still
trauma,hospitalisationorpartialorpermanentdisability. enoughforyour needs.
Herearesomevitalfactstoconsiderbeforechoosingyourcover. 5 HOW DO I

1 DO I ALREADY Hough of Hampshire Independent OF INCOME? means the policy will pay out even
PROVE LOSS

Advisors in Durban.
thoughyoucan do work that’s not
HAVE COVER?
Proving loss of income
But if you’re running your own
yourusualoccupation.
Many employers take out
is one of the head-
business or you’re the main income
some disability cover for
aches of claiming be-
generator of the business, the
WHAT’S THE
their employees. The hu-
man resources depart-
quiteabit.Some insurers want to
be as short as possible, for exam-
ment can tell you if you waiting period should preferably causeinsurers’ requirements vary 7 EXPECTED
see on your bank statements that
ple seven days. The premiums of
RETIREMENT
have cover. If you have polices with shorter waiting peri- you’re no longer receiving an in-
goodcover through your job, you odsareoften higher than those come, while for others medical cer- AGE?
don’t need additional income pro- withlongerwaiting periods. tification is what’s most important. This determines for
takeoutyourown policy. 3 WHAT’S THE to you what the requirements are permanentdisability are paid out.
tection. On the other hand, your
how long benefits for
Ask the financial planner to explain
work policy may be quite limited
and not fully compensate for loss
It should preferably be to the same
ofthevariousinsurers before you
ANNUAL
age as you expect your pension or
of income if you can no longer
makeyourchoice.
work. If this is the case, or if your
PREMIUM
retirement annuity payouts to
employerhasno cover in place,
start, otherwise you could be left
WHAT’S
INCREASE?
without income for a few years.
2 WHAT’S THE onthepolicyholder’s age, job, 6 ‘ANY’ OR Many policies pay out up to age 65
Premiums vary depend-
ing, among other things,
‘OWN’
or70,butthere are now also prod-
uctsthatpayout for your lifetime.
OCCUPATION?
WAITING
health,theamount of cover and the
PERIOD?
Some policies will pay
payout wanted. Look at how differ-
WHAT ARE
out only if you can’t do
This is the length of
creases are structured. The fine
time you have to be ent policies’ annual premium in- worktheinsurer believes you’re 8 THE EXCLU-
disabled before you print could reveal that although capable of doing given your train- SIONS?
canlodgeaclaim. Waiting periods your initial premium seems accept- ing, experience and qualifications. These usually apply
They refer to it as “any occupation”.
varyfromseven days to two years. able, annual premium increases are to existing health con-
The company and the insured per- huge. Also ask what the policy con- If you’re a computer programmer ditions that may put
and lose your leg, for example, you
son determine the length of the ditions are should you decide to can still do your work without it, your ability to work and earn an in-
waiting period. For instance, your cancel your policy. Policies can usu- come in future at risk, for example
present employer could have tem- ally be cancelled in 30 days and cov- but if you lose your eyesight you psychiatric, joint or back condi-
probably won’t be able to do it. If
porary disability cover in place that er stops at midnight on the last day the requirement is that you must tions. If you become unable to
covers you from three months to of your final premium. Premiums al- work because of taking part in
two years. Because you’d be paid ready paid aren’t paid back. be unable to do your own work, it terrorist activities, illegal behav-
within the first three months of iours and self-inflicted injuries,
disability, you’d need income pro- S Association for Saving and Investment South Africa: claims will probably be rejected.
tection with a waiting period of GETMORE asisa.org.za This also applies to hazardous
onlytwoyears,explainsBarry ADVICE: S Financial planners: www.fpi.co.za and www.fia.org.za sports activities.
48 | 6 FEBRUARY 2020 you.co.za