Disability Insurance
Protect your income with disability insurance. Discover coverage options, benefits and costs to ensure financial security for you and your loved ones.
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Imagine an injury or illness suddenly making it impossible for you to work. Disability insurance provides an essential safety net that safeguards your income if unexpected challenges arise.
Your ability to earn is one of your most valuable assets. Without it, a disability could disrupt your family’s financial stability.
Prioritising disability insurance is key to long-term security and forms the foundation of your well-structured financial plan. Read this guide to learn more about disability insurance and how it can provide peace of mind for you and your loved ones.
What is disability insurance?
Disability insurance provides financial support if you are unable to work due to an illness or injury. It replaces a part of your income while you recover or manage a permanent disability. With disability insurance, you can pay for your living expenses.
Many of us do not consider the possibility of becoming disabled or critically ill. However, the reality is more common than we think. In fact, according to gov.uk, almost a quarter of British citizens were registered as disabled from 2022 to 2023. This shows the importance of including disability insurance in your financial planning.
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Benefits of disability insurance
Disability insurance offers regular monthly payments if you are unable to work due to illness or injury. This provides a steady income, allowing you to maintain your lifestyle and cover daily expenses.
Disability insurance is ideal if you:
- Are the sole or primary breadwinner in your family and your family depends on your income
- Work a high-risk job, increasing the chance of accidents
- Engage in extreme sports or activities that carry a higher risk of injury
- Have a family history of disabilities or illnesses
- Do not receive long-term disability coverage from your employer
Types of disability insurance
There are two common types of disability insurance you should consider.
Short-term coverage
Short-term disability insurance covers you for temporary periods, typically up to two years. It offers income replacement while you recover from an injury or illness that prevents you from working for a limited period.
Long-term coverage
Long-term disability insurance is designed for more severe or long-lasting disabilities. This type of coverage begins when short-term disability insurance ends. Long-term coverage can last for years, until retirement age or even the rest of your life. This will depend on the severity of the disability and your policy.
Why is disability insurance important?
A sudden illness or injury can be a challenging time in your life, but it can also result in the loss of income.
Without a steady source of income, you and your family may struggle to meet financial commitments, including:
- Mortgage payments
- Medical care
- School fees
- Groceries, bills and other costs of daily living
Disability insurance enables you and your family to maintain a high standard of living.
It is a good idea to consult a financial adviser to review your options and ensure your policy meets your needs.
How much does a disability insurance policy cost?
The cost of the disability insurance policy depends on several factors, including:
- Age
- Occupation
- Medical history
- Risk level of your job
- Smoking status
- Monthly income
Monthly premiums generally range between 1% and 3% of your gross income. It is worth noting that higher-risk occupations or lifestyles may lead to higher insurance premium costs.
Disability insurance vs. life insurance vs. critical illness insurance
Understanding the differences between disability insurance, life insurance and critical illness insurance is important when building a financial planning strategy.
Disability insurance vs. life insurance
Disability insurance provides monthly benefits if you become unable to work due to an injury or illness. It helps you maintain your income.
In contrast, a life insurance policy offers a lump-sum payout to your beneficiaries in the event of your death. This ensures their financial stability after you are gone.
While disability insurance protects your ability to earn, life insurance safeguards your loved ones' future.
Disability insurance vs. critical illness insurance
Both disability insurance and critical illness insurance support you during challenging health situations, but they differ in coverage.
Disability insurance provides monthly payments if you cannot work due to illness or injury.
In contrast, critical illness insurance delivers a one-time lump-sum payment if you are diagnosed with a covered condition.
These two types of insurance complement each other by covering different financial needs during health crises.
Choosing the right disability insurance policy
Choosing the right insurance policy in South Africa can seem complex, but with proper guidance, it is straightforward.
At Holborn Africa, we provide expert guidance and personalised solutions to best support you and your family.
Our experienced financial advisers are dedicated to finding the policy that best suits your individual circumstances, ensuring you receive the financial protection you deserve.
Frequently Asked Questions
Short-term disability insurance covers temporary periods of disability, usually lasting up to two years.
In contrast, long-term disability insurance kicks in after short-term coverage ends and can last for many years or even a lifetime.
