#AskaFinancialPlanner: Do I really need to spend money on disability cover?
Hi, I’ve recently had a chat with my colleagues during a work lunch about disability cover. We are all young professionals starting out in promising careers; some of us have disability cover and some don’t. Why should someone in my position have this? I feel I’m better off letting my money work for me, earning interest, in an investment. – Xolani
Hi Xolani, I like to use the following example of someone I know well. Let’s say that you were severely injured in motor vehicle accident tomorrow that leaves you paralysed from the waist down for the rest of your days.
Now let’s assume that it would cost R12,000 a month for a specialised nurse to look after you for the rest of your life. Yes, R144,000 a year for the next 35 years (around R5m). Your parents, who need to worry about their own retirement and old age, will most likely have to channel money they have intended for themselves to you, so that you can receive care and live in comfort. Don’t forget that you still have other living expenses, medical aid and that you still need to save for retirement somehow.
What would happen if your parents are no longer around? Would you be happy to be moved from an expensive clinic or facility to a more affordable one or government facility for the rest of your years?
Yes, your partner or siblings could offer help and support, but do you really want to take away from their careers, lives and opportunities?
If I think about it this way, it’s an easy decision for me. My partner and I have bright futures ahead. We both owe considerable amounts on our mortgage bonds. She would not be able to settle the bond without my Income (which I would no longer have if I were disabled).
Disability cover is not important because it protects you financially. It is important because it protects your loved ones financially as well.
Got a pressing question? Email email@example.com and we’ll be sure to assist
Donovan is a financial advisor at Money Wise Associated Financial Services who believes in challenging the status quo on how financial advice is currently delivered to clients. He takes pride in showing his clients that financial and other goals are attainable through appropriate planning and affordable solutions. Donovan has completed his Masters in the field of Financial Economics, Honours in Investment Management with distinction and Bachelors of Economics with distinction.