How income protection can help you when you’re sick

Your greatest asset is probably your ability to earn an income, which provides a certain lifestyle and the capacity to take care of your dependants. That’s why it’s so important to protect your income against unforeseen illness or injury and to provide for your dependents after your death.

JustMoney finds out how income protection can assist you when you're sick.

Tip: Ensure that your debt is paid while you recover, get a credit life insurance quote here.

The purpose of income protection benefits is to cover the life insured’s inability to work as the result of an illness or injury, says Karen Bongers, product development actuary at Sanlam Individual Life.

For example, you may need a six-week recovery period after a serious operation or have to stay at home for three months after breaking your leg in a motor vehicle accident and may not be able to earn an income. As a result, you may be unable to make your mortgage and credit card payments, or pay for other normal monthly expenses like groceries, data, and school fees. At times such as these, an income paid by income protection benefits will be vital.

Insurance companies offer a range of income protection benefits. These income benefits are designed to help replace any lost income while you’re physically or functionally impaired and can’t earn an income, says Khensani Baloyi, senior product specialist at Old Mutual.

To claim from most income protection benefits, you’ll need to prove a loss of income, as well as medical disability, among other claim criteria set out in your contract which you need to meet to qualify for a payout, says Baloyi.

With some benefits, you don’t need to prove a loss of income. All you need is a doctor’s note proving that you’ve been booked off.

Things to look out for when buying income protection

• Payout or benefit amount: You must be sure of how much you’re going to receive when you submit your claim. Sometimes the amount you receive also depends on whether you have other payouts from other insurers.
• Waiting period: Waiting periods for payouts can range from seven to 30 days, depending on the insurer.
• Exclusions: Insurers don’t always cover every illness. Before you take out your income protection, make sure that your illness is covered. Another thing to look out for is whether your insurer covers preexisting illnesses.
• Premiums: How much you pay for your insurance will depend on factors such as age, your lifestyle, health, gender, and the kind of job that you do. Usually those who are older, have a risky profession and/or lifestyle pay more. The healthier you are, the less you pay on premiums.

Income protection in the time of Covid-19

Income protection claims resulting from Covid-19 will be assessed on individual merit against the applicable policy terms, including the applicable waiting period, says George Kolbe, head of marketing for Momentum Retail Life Insurance.

The incubation period appears to be relatively short and most individuals who test positive for the virus generally recover within two weeks, barring any complications. This means that clients with a seven-day waiting period on their income protection benefits are most likely to have qualifying claims.

READ MORE: What can you claim critical illness cover for?

Because of this, some companies have temporarily amended their claims practice to treat confirmed cases of coronavirus infection as a defined event for a 14-day guaranteed pay-out. This will be applicable to clients who selected a seven-day waiting period. If clients are medically booked off for longer periods, they will  qualify for additional pay-outs.

Some companies have extended their assessments of being unable to work, to include being medically isolated on the medical advice of a doctor or by government authority, in response to direct or probable contact with Covid-19.

If you’re sick, income protection benefits can pay out to help you replace any lost income if you’re unable to do your job. 

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