In the same way that we never plan to get ill (see our blog from last week), none of us plan to be disabled. And… in so doing, we can inadvertently disable our financial portfolio.
We all know that accidents happen, we can do our best to avoid them, but ultimately we can’t stop them. That’s why they’re called accidents. They don’t only happen to the extreme sports enthusiasts, those who live on the wild side or those who we think are negligent. Accidents happen to everyone; they happen to you and they happen to me.
When we don’t work in a physically dangerous industry and are healthy, we think we won’t need disability insurance. But, we could be very wrong. This type of life event (whether temporary or permanent) can completely derail and disable your financial portfolio.
Reframing disability insurance
Disability cover, including for temporary disability, is not about how likely we are to get hurt at work. In fact, it’s the company’s problem if we are. However.. more likely causes for disability insurance could include:
– A back injury from a fender-bender leaves us unable can’t work for a while
– A small fall at home results in leg or knee surgery, making us reliant on crutches for a month or two and potentially unable to earn our full income
– Due to stress, our health suddenly deteriorates and critical illness cover doesn’t include treatments like dialysis for kidney failure
Who needs it?
Anyone who earns an income to support themselves needs disability cover, because that is the sole focus of the insurance: protect your income and cover expenses if you’re physically unable to work due to a sudden accident or some other physical inability to work.
If you are disabled, through an accident or illness, and are unable to earn as much money as you did previously, you will receive financial cover to compensate for the loss in earning ability.
This is extremely important and also highly unique to how you make a living. While a call centre agent breaking their arm might not be unable to work for more than a few days, a painter who sells their art for a living would be unable to work with a broken arm. A knee operation could halt or even end a sales representative or an athlete’s career, but not necessarily a private practice lawyer.
But how likely is disability?
More likely than we think. A study done in the much more safety-conscious USA found that 5.6% of all Americans are likely to be permanently or temporarily disabled every year – and the majority of those will not be at work. This is more than double the chance of a woman dying from breast cancer (2.6% chance) and close to the same risk of contracting Alzheimer’s after the age of 65.
This is not even considering the possibility of you being involved in a car accident; the number one cause of disability claims in South Africa.
Do you really need Disability Cover? Well… if you want the security to thrive, then we believe you do.