Three things you need to do about disability insurance

Take a guess. What percentage of healthy people between the ages of 35 and 65 become disabled or fall ill for longer than 90 days during their working lives?

As it turns out, it could easily be 30 percent, whereas your odds of a lethal shot in a game of Russian roulette are only 17 percent. If you are unprepared for disability, you are playing something far worse than a dangerous game.

Who knows how many South Africans suffer from anxiety because they are not prepared for illness or disability? If they do get as far as acting on that anxiety, they often defer to an expert – a financial adviser. An impartial financial adviser will prepare you for the possibility that disability may strike.

There are three things you need to do to cater for the risk of disability:

• Read “Considerations for disability insurance” on the Association for Savings & Investment South Africa website (www.asisa.org.za);

• Spend some time, no matter how uncomfortable, imagining what your life would be like as a person with an illness or disability; and

• Expect the correct advice to be a mix of insurance and savings.

It might not be a welcome thought, but your health is subject to the inescapable laws of nature. One law of nature, or so it seems, is that the world has a tendency to produce disorder and chaos from time to time, as in “All good things must come to an end”, “Things fall apart”, and “What can go wrong will go wrong”.

To be a healthy human animal, from a physician’s point of view, a whole host of bodily systems must co-operate: respiratory, cardiovascular, digestive, urinary, visual, musculoskeletal and nervous. Some of these systems will fail some of the time, even in the bodies of those with a flawless genetic inheritance. The individuals who will be affected, and the exact disability and exactly when it will strike, is not known to us beforehand. We have no choice but to look at every moment of health as a gift, nothing less.

Disability insurance shows us clearly how insurance contributes to the functioning of society. Every healthy working person has the same uncertain destiny , when it comes to health, and insurance companies allow us to share the risk. We can bear more as a group than we can as individuals.

A functioning disability insurance market is the mark of a functioning civilisation, and it is a creative way to push back a little longer against the inevitable descent into disorder and chaos. And, in a functioning civilisation, we fight in a new way: not with knives and guns, but in the cool spaces of administration and law.

Two common responses at this point might be “I am young and work a desk job, so the odds of disability must be very low” and “my employer has me covered”. Those are precisely the answers that get many people into serious trouble. Insurance should not be used to protect you against events such as losing your camera, missing a flight, extending the warranty on your fridge, or getting an inconsequential bump to your car unless you already own the most competitive disability insurance on the market.

Disability insurance can cost between one and three percent of your annual income, and you should pay this willingly. That is the truth, and a study by True South Actuaries and Consultants on behalf of Asisa suggests that large numbers of South Africans are avoiding this truth. Insurance is not there to dry your tears; it is there to save your life. • Pieter du Toit is a Fellow of the Actuarial Society of South Africa and a member of a group of qualified and student actuaries writing articles on topics that serve the public interest.