Each year, many South Africans wisely invest in life insurance to safeguard their loved ones’ futures. While acknowledging life’s inevitable cycles, it’s essential to recognise the overlooked risk that often goes unnoticed: the potential inability to work due to illness or injury.
Recent research by Bidvest Life reveals a striking statistic – a 30-year-old male has only a 15% chance of passing away before retiring, but a 91% chance of being unable to work for two weeks or more during his career1. This raises the question: Are you financially prepared to cope with such a situation? Unfortunately, most South Africans are not.
“Your income funds for your daily and long-term needs – medical care, housing, transportation, groceries. Every employed South African should consider the financial impact if they cannot work for a period due to illness or injury. Even short-term setbacks can lead to long-term financial consequences,” says Nic Smit, Chief Product Actuary at Bidvest Life.
Challenging misconceptions about income protection is essential for empowering South Africans to make informed financial decisions.
Myth 1: Income protection is only for full-time employees with a stable monthly income
Reality: This assumption couldn’t be further from the truth. Income protection is designed to cater to a wide range of occupations, including small business owners, self-employed individuals, freelancers, commission earners, artists, musicians, students, and homemakers.
Myth 2: Income protection is expensive
Reality: Income protection is more affordable than you might think. For example, a 35-year-old male who earns R30,000 a month could protect 100% of their income against the risk of injury or illness until the day they would have turned 65 for R382 a month*. You can also insure less than 100% of your income, with a minimum coverage of R1000 per month.
Myth 3: Income protection doesn’t pay out
Reality: Bidvest Life paid 89% of all lodged, unique income protection claims in 20222. The primary reason for the remaining 8% of non-payments was clients attempting to claim within their waiting periods. It’s crucial for South Africans to discuss their waiting period with their financial adviser before purchasing cover, as this specifies the duration a policyholder must be unable to work before the policy starts paying out.
Smit adds, “Many customers believe they can rely on sick leave, savings, or scrape by for a month or two if they cannot work. However, for many South Africans, a 3-month interruption can lead to dire financial consequences.”
The saying “hope for the best, prepare for the worst” holds particularly true when considering the financial impact of unexpected work interruptions. By debunking the myths around life insurance, especially income protection, South Africans can better recognise the value of their income and take proactive steps to secure their financial stability.
If you want to prioritise income protection so that you are better equipped to face life’s curveballs click here to request a quote or speak to your financial adviser if you are already a Bidvest Life policyholder.
References/Disclaimer
- Non-smoker. Retirement age 70. 2019 Risk Reality Survey
- Bidvest Life 2022 Claims Report
- *Disclaimer: Ts&Cs apply. Premiums calculated based on chosen coverage and risk profile.
