Advisers: Here’s how to bust the myths around income protection

By Steve Piper, Chief Distribution Officer at Bidvest Life

As financial advisers, you’re in the business of asking your clients the tough questions. Like: ‘If you couldn’t work because of injury or illness, how would you manage financially?’ For most people, the answer is simple: they wouldn’t. And yet, relatively few South Africans have taken steps to protect their incomes.

Part of the reason for this is that there’s just not enough awareness of income protection as an insurance category in South Africa. That’s got to change. We want to shift the old focus on traditional life cover to a new focus on what really matters: for consumers to be able to protect themselves, their businesses and their families when they can’t earn an income due to illness, injury, disability or death.

There are also several popular myths around income protection that we have busted for you and your clients for once and for all.

Myth: Income protection is expensive

Reality: Income protection is more affordable than you think. Your clients can protect up to 100% of their after-tax income against life’s curveballs from as little as R100 a month*. They can decide to insure less than 100% of their income due to affordability, or simply because they don’t feel they need the full amount. The minimum cover required is R1000 per month. Either way, make sure they’ve considered the financial impact if they are unable to work for a period of time as a result of an illness or injury. Even temporary setbacks can quickly spiral, with long-term financial consequences.

Myth: Income protection is only for people with permanent employment

Reality: Today, more people are working in the gig-economy as freelancers, contractors or have side-hustles to supplement their incomes. All hard-working South Africans should be able to protect their income against the risk of an injury, illness, disability or death, no matter how they earn their income. This is not a product that is exclusive to salaried individuals, but is accessible for business owners, self-employed and freelancers, commission earners, and even high-risk occupations such as artists and musicians, as well as non-income earners like students and homemakers.

Myth: Income protection doesn’t pay out

Reality: Bidvest Life paid 92% of all claims made in 2020. Of the 8% of claims that weren’t paid, the leading cause of non-payment was that clients tried to claim under their income protection policies while still within their waiting period. In income protection terms, the waiting period is the number of days a policyholder must be sick or unable to work before a claim will start paying. As advisers, we should be showing our clients how waiting periods work, explain how different waiting periods can impact them, and what they mean when it comes to claims stage.

Many consumers think they’ll be able to fall back on sick leave, savings or even skimp by for a month or two if they can’t work. The fact is that for many South Africans, a three-month interruption can have dire financial consequences.

As Bidvest Life, we’ve always believed that South Africans should insure their income first.

Advisers have a key role to play in driving this new agenda. Don’t let old myths get in the way of your clients’ financial freedom!

*Disclaimer: T’s and C’s apply. All premiums are calculated according to the cover chosen and risk profile.