Income protectionIncome protection ensures that your lifestyle will not be affected if you become disabled or severely ill. Income Protection benefit will pay your monthly income if you are unable to work due to a disability or severe illness.
As Income Protection benefit can vary substantially from one life insurance company to the next, we use Discovery Life, our preferred provider's Income Continuation Benefit to illustrate available benefits, terms and conditions. This page has the following sections: 1. How your claim is assessed 2. Benefits available in an Income Continuation Benefit 3. Real life examples of how clients have benefited from Income Continuation Benefit 4. Who should consider an Income Continuation Benefit 5. General terms and conditions of Income Continuation Benefit How your claim is assessedAs an Income Continuation Benefit claim can be complex to assess, we first explain how your claim is assessed in the event of disability or severe illness.
- Under the Automatic Sickness Underpin, you will not need to prove loss of income for the first 12 months (24 months for certain professionals in private practice or partnership), and you can claim by simply submitting a doctor’s note. Under the Loss of Income Underpin, you will qualify for a payout f you lose income as a result of a disability or severe illness. With the LifeTime Severe Illness Underpin, you will receive up to 215% of your insured amount for up to six months, depending on the long-term lifestyle impact of the illness. If you qualify for a Category B disability claim, you will get 50% of your insured amount for up to five years, with the Capital Disability Underpin. If you are hospitalised or suffer a qualifying fracture, you will get 100% of your insured amount for up to three months with the Injury and Hospitalisation Underpin. |
Discovery explains how Income Continuation Benefit works in the video below.
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Benefit options
Increase payoutDuring claim, increase your income each year by CPI or CPI + 3%, or choose to keep your income level.
Expiry ageYou can choose to have your policy cover you up to age 60, 65, 70 or for whole of life. With the Whole of Life option, a new set of tailored medical criteria will be used after age 70.
Waiting periodThis is the period calculated from the start date of your disability or illness, after which you will start to receive a monthly income. You can choose a waiting period of 7 days (for professionals only), 1 month, 3 months, 6 months and 12 months.
The longer the waiting period, the cheaper the premium. Upfront Lump-sum disability payoutIf you qualify for a Category A disability claim you can receive an upfront lump-sum payment of up to 36 times your Income Continuation Benefit amount, based on the LifeTime Impact of the disability. This payment is over and above your regular monthly benefit payments.
Contribution ProtectorThe Contribution Protector covers your premiums for your other Discovery products at 100% for up to 24 months on
the Comprehensive option, or 25% for up to 12 months on the Core option, on temporary disability. Discovery Life will pay out the same amounts on retrenchment or liquidation of your business (if you are a business owner), for up to six months. Increase cover without underwritingIncrease your cover without underwriting every three years by 20%, subject to a negative HIV test, with the Guaranteed
Insurability Benefit. This is particularly valuable if you expect your income to grow faster than inflation. |
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How clients have benefited from an Income Continuation Benefit
Juliet was involved in a car accident in 2008, which prompted her to take out the Income Continuation Benefit from Discovery Life. Five years later, this proved to be one of the best decisions of her life. The Income Continuation Benefit provides her with an income – and peace of mind – while she recovers from a brain tumour. |
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Dr Arendse*, a dentist, underwent a corneal transplant and was booked off sick for a two-month period |
Further information on Income Protection policy
Tax consideration |
Your income protection premiums are not tax deductible. In the event of a claim, the money you receive is tax free.
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Regulatory protection |
Life insurance companies in South Africa are regulated by the Financial Services Board. South Africa enjoys excellent financial services regulations and supervision, giving you the confidence that a life insurance company will pay according to the insurance contract you have signed up.
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Medical underwriting |
Underwriting is the process used by a life insurance company to assess your risk factors. When you apply for an Income Protection benefit, the life insurance company will do medical tests on you. If you are not healthy, the life insurance company may increase the premium it will charge you, decline certain benefits, or decline your application.
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General exclusions |
Life insurance companies will not pay Income Protection claims on most of the following reasons:
- Participation in hazardous pursuits and/or risky activities - Self-inflicted injuries - War, civil commotion, riot, terrorist activity or rebellion - Radioactivity or nuclear explosion - Violation of criminal law by the life covered. More info on general exclusions: Exclusion grid summary 2014 (courtesy Wealth Associates) Exclusion grid 2007 (courtesy National Financial Partners) |
Who should consider investing in an Income Protection benefit?
You should invest in an Income Protection benefit if:
- You can easily provide proof of income, such as payslip, bank statement showing regular income.
- You are a professional working in a salaried job
- Your are a professional in private practice or partnership
- You are a business owner.
- You want to insure your ability to earn an income. This is where a disability benefit will help you financially when you become disabled and unable to work.
- You can easily provide proof of income, such as payslip, bank statement showing regular income.
- You are a professional working in a salaried job
- Your are a professional in private practice or partnership
- You are a business owner.
- You want to insure your ability to earn an income. This is where a disability benefit will help you financially when you become disabled and unable to work.
How much Income Protection cover should I have?
You should consider:
- How much money you currently have
- The amount of income your dependants will need if you can't provide for them
- If you are married, how much your spouse will need
- The outstanding loan amounts you will need to settle
- Your future needs.
Typically your Income Continuation Benefit cover amount is set to 75% of your income before tax (or 100% of your income after tax). You may supplement the shortfall with Temporary Income Continuation Benefit.
- How much money you currently have
- The amount of income your dependants will need if you can't provide for them
- If you are married, how much your spouse will need
- The outstanding loan amounts you will need to settle
- Your future needs.
Typically your Income Continuation Benefit cover amount is set to 75% of your income before tax (or 100% of your income after tax). You may supplement the shortfall with Temporary Income Continuation Benefit.
What is the minimum premium?
The minimum premium is about R100 per month. So an Income Protection benefit is affordable.
What if I don't pay my premium?
If you miss a premium payment, the life insurance company will try to debit your account again later in the month, or debit this month and next month's premiums next month. If you miss the premium payment again next month, the life insurance company will debit 3 months' premiums the following month. If the debit order is again unsuccessful, the life insurance company will have no choice but to terminate your policy.
After your policy is terminated, for a limited period of time, the life insurance company will allow you to reinstate your policy if you manually pay all the outstanding premiums into the insurance company's bank account, provide the proof of payment and complete a satisfactory declaration of health form.
After your policy is terminated, for a limited period of time, the life insurance company will allow you to reinstate your policy if you manually pay all the outstanding premiums into the insurance company's bank account, provide the proof of payment and complete a satisfactory declaration of health form.
Our product providers
As an independent financial planning practice, we have contracts with the following product providers in order to offer you a product that suits your needs:
Discovery, Hollard, Liberty, Momentum, Old Mutual, Sanlam, Brightrock, PPS
Discovery, Hollard, Liberty, Momentum, Old Mutual, Sanlam, Brightrock, PPS
Our preferred providers
We have done the necessary due diligence in selecting the following preferred provider:
Discovery
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We select Discovery Life as our preferred provider for the following reasons:
1. Reputable financial services group 2. Financially sound 3. Innovative product features 4. Immediate upgrade to 100% of your pre-disability income if you become permanently disabled 5. Uses 5 Underpins to assess claim, to find ways to pay the client in need 6. Meet upfront expenses with lump-sum disability payment 7. Extends cover on family members through Family Protector 8. Contribution waiver through Contribution Protector 9. Clever use of technology to provide excellent client service 10. Class leading travelling nurse service 11. Fast, fair claims More info: Discovery Life Overview Brochure |