Almost 2 million self-employed and commission workers in South Africa are dangerously under-insured when it comes to disability, according to a recent independent survey from True South Actuaries.
Any kind of accident or serious illness can radically disrupt cash flow for self-employed people and cause a major life crisis if the proper cover is not in place. Income protection is insurance designed to protect an individual’s ability to earn an income. It will replace income in the event that an individual cannot work due to unforeseen circumstances.
Brad Toerien, CEO of FMI, says there are five very common mistakes made in this area:
- Taking too much life cover and not having enough income protection in place
- Only securing cover for permanent disability and not for the far more common likelihood of temporary disability
- Not ensuring that you are covered for temporary disabilities, as a result of illness or physical injury, that could have a major impact on your ability to earn your income
- Opting exclusively for a lump sum pay-out in the event of permanent disability rather than selecting a combination of guaranteed monthly payments and a lump sum pay-out
- Failing to properly calculate the amount that would really be needed to permit a self-employed person to maintain their lifestyle in the event of a disability
Press release, Danté Piras, Ogilvy PR(Picture: business man with piggy bank from Shutterstock)