Helping your clients understand the differences between disability and dread disease cover

By: Clyde Parsons, Chief Innovation Officer Brightrock

Statistics show that one in five people will suffer from a serious illness at some stage in their life, which is why dread disease and disability insurance are essential. But do clients really understand the intricacies of these types of insurance and how they fit into their portfolios? We help you to break it down for them.

As a financial adviser, you know that both dread disease and disability cover have a place in your client’s financial plan. However, many clients conflate these two benefits or don’t fully comprehend the different needs they cater for, or how they can affect each other. Here’s a back-to-basics guide to help you help your clients understand the differences.

What disability and dread disease benefits cover

Disability cover protects your client’s greatest asset, their ability to earn an income. It provides a pay-out to help cover living expenses if they become seriously ill or suffer an injury to the extent that they’ll never work again. Dread disease cover helps pay for additional expenses arising from a life-altering illness or injury that aren’t covered by a client’s medical aid, gap cover, or disability insurance. Examples could be the cost of making alterations to their home if they now use a wheelchair, or paying for a childminder to take care of children when they’re not able to.

When clients need this cover

Any person who earns a monthly salary needs to protect their income until retirement age. Younger people need more disability cover, because they have many more years left to work and many more pay cheques to protect before they reach retirement age, when their retirement savings will provide them with a regular income.
Anyone who’s concerned about closing the gaps not covered by disability and medical scheme cover needs critical illness cover. The older you get, the more you need dread disease cover, because the risk of suffering a serious illness or injury tends to increase with age. However, this is when it will cost the most, so it’s best to buy this cover (or any life insurance cover) when you’re young and healthy.

Important factors clients should consider when buying disability and dread disease cover

Disability cover should thoroughly cover a client’s most important asset: their income. When choosing disability cover, clients should consider how their claims will be assessed – do pay-outs depend on subjective occupational criteria, or objective medical criteria with an occupational underpin to provide claim certainty? How many conditions are covered? Do they need cover that would pay as a recurring amount or as a once-off lump-sum cover? Or do the clients have the flexibility at claim stage to choose how they’d like to receive their pay-out? Where recurring payments are chosen for permanent disability, will the client’s condition be reassessed in claim?

Clients should search for the most comprehensive dread disease cover: The number of conditions covered, survival periods (you want to buy cover that doesn’t have a survival period) and pay-out structures are just some the factors clients should consider when buying critical illness cover.

Your great advice can help clients make the best choice

It’s essential that you educate your clients on the differences between dread disease and disability cover to ensure they understand the specific benefits and purposes of each. You can assess your clients’ individual circumstances and recommend appropriate cover based on their needs and financial goals. Review and update your clients’ insurance portfolios regularly to ensure they remain adequately protected.

By understanding the distinct features and purposes of dread disease and disability cover, financial advisers can provide valuable guidance to their clients, helping them make informed decisions about their insurance needs and ensuring they receive the protection they deserve.