Busting the myths around Income Protection
Durban - Bidvest Life’s research shows that a 30-year-old male has a 15% chance of dying before the end of his working career – but a 91% chance of being unable to work for a period of two weeks or more during his working career 1 .
What if you couldn’t work because of injury or illness, how would you manage financially? For most ordinary working people, the answer is simple: they wouldn’t. And yet, relatively few South Africans have taken steps to protect their incomes.
Part of the reasons for this is that there’s just not enough awareness of income protection as an insurance category in South Africa, says Zanele Ntulini, Chief Marketing Officer at life insurer Bidvest Life. There are also several popular myths around income protection, which she is keen to bust for once and for all.
Myth: Income protection is perceived to be expensive
Reality: Income protection is more affordable than you think. You can protect up to 100% of your after-tax income against life’s curveball from as little as R100 a month*. You can decide to insure less than 100% of your income due to affordability, or simply because you don’t feel you need the full amount you can do so. The minimum cover required is R1000 per month. Either way, make sure you’ve considered the financial impact if you are unable to work for a period of time as a result of an illness or injury. Even temporary setbacks can quickly spiral, with long-term financial consequences.
Myth: Income protection is only for people with permanent employment
Reality: Today, more people are working in the gig-economy as freelancers, contractors or have side-hustles to supplement their incomes. “We believe that all hard-working South Africans should be able to protect their income against the risk of an injury, illness, disability or death no matter how they earn their income. This is not a product that is exclusive to salaried individuals, but is accessible for business owners, self-employed and freelancers, commission earners, and even high-risk occupations such as artists and musicians, as well as non-income earners like students and homemakers” said Ntulini.
Myth: Income protection doesn’t pay out
Reality: Bidvest Life paid 92% of all claims made in 2020. Of the 8% of claims that weren’t paid, the leading cause of non-payment was that clients tried to make income protection claims within their waiting periods. In income protection terms, the waiting period is the number of days a policyholder must be sick or unable to work before a claim will start paying. “If you’re not sure how waiting periods work, ask your financial adviser. They’ll be able to explain how different waiting periods can impact you, and what they mean when it comes to claims stage,” said Ntulini.
“Many consumers think they’ll be able to fall back on sick leave, savings or even skimp by for a month or two if they can’t work. The fact is that for many South Africans, a three-month interruption can have dire financial consequences,” says Ntulini. “Income Protection solves for what really matters: protecting yourself, your business and your family against unexpected expenses incurred due to illness, injury, disability or death.”