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SA's No 1 Insurance Blog

Who agrees with us that they really enjoy the trip between home and work every day? I bet many are asking what I’m smoking, right?

If your day’s like mine, not a day goes by without witnessing one or more of the following:

• Road rage
• Overtaking on solid white lines
• Driving through red robots
• Texting while driving
• Pushing in by someone who’s time is clearly more important than yours is
• Not maintaining the correct travelling distance between vehicles
• Swerving to avoid pedestrians walking on the roads.

Fortunately, the roads are going to get a lot quieter as we approach Easter. Well, at least for those who are staying at home. It’s everyone else we should be worried about.

Every year around this time we have some or other road safety campaign revolving around “speed kills”.
They’re absolutely right, especially when talking of our public roads. Not a weekend goes by without someone being caught travelling in excess of 200 km/h. Not surprisingly, speed and alcohol go hand in hand.
But there’s also an argument for “lack of speed kills”. Lots of pent up frustration if you’re caught behind a ‘slow coach’. Often leading to reckless driving and aggression.

But even if you obey the speed limit, you have to ask:

• “What are the chances of a pedestrian being able to walk away if smacked by a car travelling at 60 km/h?”
• “Or what of you being able to walk away after a head on collision with a truck while doing 60 km/h?”

I think it ain’t going to look pretty.
But let’s imagine you end up in a car accident and get off lightly with a broken arm or leg.

What’re the chances of you ending up out of action for a week? And what about the time off work while going for physiotherapy?

But first, you need to ask yourself a question.
It all starts by realising that the most important asset you have, is yourself.
It’s not the house you own or the person you’re married to. Think about it for a moment…

If you were never to work another day in your life, what would become of you?

I’m hazarding a guess here, but 90% of us would be in a pickle because we don’t have enough savings. Yes, maybe you’re fortunate enough to have medical aid. Maybe you’re lucky to have some sort of group income protection plan, but still…

Here are just some of the problems you might face.
Let’s argue that you’re temporarily disabled.
Here are a few what-ifs to ask yourself:
• What if your medical aid doesn’t pay all your hospital expenses?
• What if your group life benefits don’t include group income protection cover?
• What if it does include group income protection but there’s a 3-month general waiting period which applies?
• What if your income protection only covers 75% of your pensionable salary which is way less than your actual salary including allowances?

Imagine walking out of the hospital and sitting with a R20,000 doctor’s bill which isn’t being paid by your medical aid. Believe me, it happens.

Then there’s the group income protection cover.
Most employer groups don’t offer this type of cover because it’s expensive. Chances are, if you have group disability cover, then it’s the lumpsum disability type. Problem with lump sum disability is it only pays out if you’re permanently disabled.

And if you’re lucky enough to have income protection cover; what are you going to do if there’s a 3-month waiting period between claiming and receiving your first payment?

And then there’s the last scenario…75% of your net income isn’t much help when you need 100% of your income just to cover the bills.

And what if you’re permanently disabled?

Here are a few more what-ifs for you:
• What if you don’t have group disability cover at all?
• What if you don’t have group income protection either?
• What if there’s no increase in the income protection payment every year that you’re disabled?
• What if you have a massive bond owing to your home?
• What if you’re the only breadwinner in your family?

Group disability cover is great for paying off large debts. After all, who wants to live on 75% of their usual income and still owe on a mortgage bond? But the problem with lump sum disability when used for income purposes, is that it must provide an income until the day you die. At least with income protection, it pays a monthly income till retirement. Hopefully, you can then save some of that for your pension.

Then there’s the problem of zero increase in your disability income year after year. Starting off on 75% of your net income is bad enough, but imagine living on that amount for the next 20 years?

And imagine the scenario with the last two questions? Not being able to pay the bond means no house. No income means your partner needs to find a job, and fast! And being disabled means you’ll need even more income than before.

There’s a simple and very cheap solution
It’s called accidental death and disability cover. No medical tests are required at all, and since it only pays when the cause is accidental, it’s a lot cheaper than standard cover.
The one drawback is that the disability must be permanent in nature in order to claim accidental disability.

For temporary disability, you would need monthly income protection. Here the drawbacks are:
• Medical tests since they need to assess existing risks
• Be able to prove your income to claim the amount you’re insured for, and
• Be employed

A big financial institution claims stats show that 18% of Death claims are for Accidental, and of that, 59% is for motor vehicle accidents.

Conclusion:

You’ve probably heard the saying, “I’m worth more ‘dead than alive’”. The reality in South Africa is that this is not the case for the majority. There is a tremendous shortfall in the amount of life insurance owned by the average South African.

Some reading this might have the attitude of ‘It won’t be my problem when I’m dead’, but what about disability?
With disability, it is your problem.

If you’re going to be on our roads over the Easter holidays, why not spend the R100 or R200 a month on accidental death and disability cover?

The road fatality statistics back this argument up.

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