Choosing your waiting period
It is important to select a waiting period on your income protection plan in line with how long you can manage without your regular income if you are unable to work.
A waiting period is the time you are required to be unable to work before an income protection benefit will start to pay out.
You get to choose the waiting period upfront when you take out an income protection policy, Karen Bongers, product actuary at Sanlam Individual Life, says.
Waiting periods for income protection plans for short-term disability typically range from seven days to 12 months.
Thereafter, benefits with longer waiting periods will typically kick in to provide continuous cover over the longer term, she says.
If you are self-employed you would most likely opt for a shorter waiting period than somebody who is employed by a company and can rely on some paid sick leave for a period of time, she says.
Generally you will only be paid out for the period you are unable to work after the waiting period has expired, but for certain benefits, such as the Sanlam Sickness benefit (available to professionals and graduates), claims can be paid retrospectively from day one if you had selected a seven-day waiting period and have been booked off sick for at least seven days, she says.
"Policyholders don't understand the importance of a waiting period until they claim and often can't get a shorter waiting period once they have claimed," says Magda Briers, FMI's head of claims.
Nearly two-thirds of claims received by life insurer FMI last year were for periods of less than 30 days, yet more than 60% of its policyholders chose waiting periods of 30 days or longer.
FMI's CE Brad Toerien says policies with a shorter waiting period are more expensive but some providers allow you to split your cover across a range of waiting periods to make it more affordable for you. For instance, at FMI, instead of taking R30,000 worth of cover with a seven-day waiting period, you can split it with R10,000 with a seven-day waiting period, R10,000 with a 14-day and R10,000 with a 30-day waiting period.