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Disability cover

Injury at work / disabled at work / incapacitatedMan on wheelchair

Considering life and disability cover a change in your life circumstances should always prompt you to re-visit any financial plan you have in place, or to begin planning if you have not already done so. Having children should thus cause one to re-assess what, if any, insurance one has in place.  Where does one start? It is not sufficient in all cases to limit your cover to the amount required to pay your debt, e.g. your bond. What will the remaining dependants live on even if the debts are paid? How much is enough? Everyone will have different needs according to his or her standard of living. Thus it is important to assess everyone’s needs separately.

The first question to ask is: Who brings in the bacon? It is most important to first insure the life of the person who brings in the household income, or if it is a dual-income household, the person who is the major breadwinner. One must determine how much income the household will require on either the death or disability of the breadwinner. In order to do this, one would need to prepare a budget for each of these circumstances, in other words, one must consider what additional costs one would incur and what costs would potentially be reduced in the event of both death and disability.

In order to do a proper analysis one should consult with a professional financial advisor who is willing to spend time discussing your personal needs and future goals and who is able to do a comprehensive needs analysis for you. This analysis should take into account your existing income, assets, liabilities and insurance cover as well as your future needs in the event of death and disability, etc. A competent financial advisor should also be able to guide you in preparing your budgets, pointing out areas of additional cost and areas where costs will potentially decrease.

Once the breadwinner of the family has life and disability cover in place there is also the option to obtain life and disability cover for a housewife/househusband. Why would one do this? In the event of the death or disability of the person it may be necessary to employ a child minder and/or domestic to fulfil the role of caregiver previously fulfilled by the housewife/househusband. It is prudent to take out life cover in one’s twenties/thirties, which is when most people have children, as the younger and healthier you are, the cheaper the cover. If you leave it for too long you may become uninsurable for medical reasons.