Do you value yourself?

If you’re a homeowner, you could be forgiven for thinking that your most significant financial asset is your house. But step into your bathroom and look in the mirror – we would say that your greatest asset is you! More specifically, it’s your ability to work and earn wages or a salary.

All your plans and hopes for the future depend on being able to do paid work. Whatever your job or career, this is how you save for that family holiday, keep your car on the road and put food on the table.

If – due to an accident or illness, for example – you suddenly found yourself unable to work, this could place enormous financial strain on both you and your family. The good news is that in the same way that you protect your other assets through specific insurance policies, you can also insure your future income through income protection cover.

Despite the possible financial consequences of being unable to work, remarkably few South Africans sign up to this sort of policy. This could be due to our high unemployment rates, or the indifference that many people have towards insurance in general.

You wouldn’t sleep easy at night without house and contents insurance, and you’d be very nervous driving on our roads in an uninsured vehicle. The loss of either your home or your car could however be far less significant than your potential loss of earnings if you were unable to work, especially as your medical costs may increase dramatically if you’ve been prevented from working by a disability or chronic illness.

Benefits of income protection cover

Income protection cover not only protects this very valuable asset but can also take care of the things that are most precious to you: your family and their welfare. You may be fortunate enough to work for a company that provides group risk benefits including a group income protector, but if you also have a personal policy with this feature, you could in fact be over-insured.

This is the opposite end of the scale to being uninsured, but comes with its own problems. The purpose of insurance is to effectively restore you to the position you were in before you needed to make a claim. However, if you are over-insured when it comes to income protection and both policies pay out, this would be a clear case of enrichment.

In this event, insurers would aggregate the different benefits you were entitled to, and only pay a portion of each. So, if you are covered by an employer and a personal scheme that both pay out at 75%, you would not receive 150% of your salary, but rather a portion of each benefit. In other words, you could be paying for cover you will never receive.

Are you over-insured?

If you’re in this position, don’t do anything hasty. It’s almost certainly not in your best interests to cancel policies as your age and health profile may have changed since you took them out. That means that you’d be unlikely to get cover at the same rate again.

Rather speak to an advisor who could assist you by restructuring your policies. If, for example, you have group risk income protection cover of 75% of your salary, he or she could lower your personal protection policy to 25% so that in the event of a valid claim, you would receive 100% of your pre-claim salary. No enrichment, and no paying for redundant cover.

If you value yourself and your ability to earn as an asset – and you should  –  talk to THE people company today to learn how you could protect yourself and your loved ones with affordable income protection cover.