The Risks of Being Underinsured

The four greatest risks facing South Africans from an insurance perspective are temporary illness or injury, permanent disability, critical illness, and death. Injury and temporary illness are the greatest risks to working careers, with a person being nine times more likely to have a temporary disability than to have their car stolen or hijacked.

Benefits of Lump Sum Disability Cover

Lump sum disability coverage provides a single capital payout in the event of a permanent disability. This form of insurance can be used effectively to settle home loans or debt in the event of a disability and can also provide much-needed financial assistance in respect of lifestyle adjustments, home renovations, and vehicle modifications that may need to be done. If income protection cover is not available to you for whatever reason, lump sum disability cover can be used to provide an income, although this comes with inherent investment, longevity, and inflationary risks.

Reasons for Choosing Lump Sum Disability Cover

There are several reasons why individuals may choose lump sum disability coverage over monthly income protection. These include:

Financial security: A lump sum payment can provide financial security for individuals and their families, allowing them to manage their finances and plan for the future, without the need for ongoing monthly payments.
Flexibility: Lump sum disability coverage offers greater flexibility in how the funds can be used. Beneficiaries can choose to invest the money, use it to pay off debts, or make necessary lifestyle adjustments.
Avoiding ongoing insurance company involvement: Taking a lump sum payment can mean avoiding ongoing involvement with the insurance company, which can be beneficial for those who do not want to deal with the specific criteria and rules that come with monthly payments.

The big difference between Lump Sum Disability cover and monthly Income Protection cover is that for a Lump Sum Disability benefit to pay, the life assured must be Permanently Disabled but the Income Protection will pay if you are temporarily or permanently disabled.