Disability cover
Disability cover is usually added to life cover, but can be acquired separately.
Capital (or lump sum) disability cover
Capital disability cover can be added to life insurance
, but cannot be greater than the amount of life cover on the policy - for example, a life cover policy of R500 000 may have capital disability of any amount up to R500 000 attached to it. But you will only be paid out once you provide proof that disability is permanent
. You can also add it to your endowment policy
.
Income protector disability cover
This is the best
disability risk cover option. One form of cover provides a monthly income
with annual increases
. In effect, if you are permanently or temporarily disabled, it replaces your salary until you recover or die, or the policy matures, whichever comes first.
For example, a 25-year-old man has disability cover of R5 000 per month, for which he pays a (tax-deductible) monthly premium of R150. He becomes disabled and claims an income until he turns 60. He can expect to receive a salary of R5 000 every month for the stipulated period, with a built-in annual increase.
Retirement annuities will be discussed in detail subsequent issues.
Medical insurance
Medical insurance pays out a stated benefit every time you undergo a medical procedure covered by the insurance policy. The amount depends on the procedure covered by the insurance policy. For example, an appendix operation may pay out say R10 000, while a heart transplant may pay out say R180 000. In other words, the amount is calculated according to what was done rather than how much it cost.
So, if you have your appendix removed at a state hospital and it costs R8 500, you keep the difference between R10 000 and R8 500. But if you choose a private hospital and it costs R11 000, you have to pay the R1 000-difference yourself. The insurer may not pay doctors or any other service provider directly and must pay the amount to you, the insured. This type of insurance is therefore not the same as a medical aid scheme.
Hospital plan
Insurance companies also offer a pure "hospital plan" insurance policy. This is not as expensive as a medical aid scheme membership, but payouts are limited to a stated amount (say R200 or R300) that you get paid for every night that you spend in a hospital. Paying doctors' bills and hospital costs remain your own
responsibility, and you may find that your expenses far exceed your hospital plan payout.