A steady income is the foundation on which most financial decisions rest. It covers the essentials, supports dependants, and enables future planning. But when illness or injury prevents someone from working, that financial foundation can be unexpectedly disrupted.
Income protection insurance is designed to mitigate that risk. It provides a regular income when you're unable to earn, helping to maintain financial continuity in the face of medical setbacks. Unlike once-off cover such as disability lump sums, income protection pays out month by month—making it one of the most practical forms of financial security for working individuals.
It is especially relevant for professionals, business owners, freelancers, and anyone without extensive sick leave or built-in salary protection.
Income protection insurance is a policy that replaces a portion of your income if you're unable to work due to illness, injury, or a medical condition. The cover typically continues until you recover, retire, or reach the end of the benefit term outlined in the policy.
It isn’t a once-off payout like disability cover. Instead, it functions more like a salary replacement—paid monthly, after a waiting period, and taxed in the same way income would be. This structure makes it easier to keep up with regular financial responsibilities like bond repayments, school fees, or household expenses.
Many policies are structured to pay out between 50% and 75% of your usual income. Some may include built-in escalation to keep up with inflation, or allow for partial payouts if you can return to work in a reduced capacity.
Crucially, income protection isn’t only for high-risk professions. A serious illness or accident can affect anyone, and without financial cover, the consequences often extend beyond personal finances—impacting families, businesses, and retirement goals.
Income protection policies are designed around one core function: replacing your income when a medical condition prevents you from doing your job. But how that benefit is calculated, when it starts, and how long it lasts depends on how the policy is structured.
Most policies include a waiting period—often 7, 14, 30, or 90 days—before payments begin. The longer the waiting period, the lower the premium, but also the longer you need to cover your expenses out of pocket before the insurer steps in.
Once activated, the policy pays a monthly income either for a fixed term (such as 12 or 24 months) or until you reach retirement age—depending on what you selected when the cover was put in place.
The monthly payout is typically based on your pre-disability income, up to a cap (usually between 75–100% of your net earnings depending on the insurer). Policies usually require proof of earnings at application and at claim stage to verify eligibility.
Some policies pay out if you can’t perform your specific occupation, while others only pay if you’re unable to do any work at all. Own-occupation cover is more comprehensive but can carry a higher premium.
Premiums can be guaranteed (fixed for the duration of the policy), age-rated (increase as you get older), or reviewable (subject to periodic increases at the insurer’s discretion). Each has different affordability and long-term implications.
A good income protection policy doesn’t just replace lost income—it protects your lifestyle, safeguards your long-term financial plan, and removes the need to dip into savings or take on debt in a crisis.
For many working professionals, income is the cornerstone of every financial goal—paying the bond, funding a child’s education, building up retirement savings. Without that income, the entire structure becomes vulnerable.
Yet most South Africans insure their cars, homes, and belongings without hesitation, while leaving their most valuable asset—their ability to earn—exposed. Income protection exists to fill that gap.
A sudden illness, injury, or medical condition doesn’t just stop a salary. It disrupts every part of life that depends on consistent cash flow. Few households have the reserves to maintain their standard of living through months—sometimes years—without income. Even fewer can keep their long-term financial plans on track under those conditions.
Income protection ensures that if you’re unable to work, your monthly expenses don’t immediately turn into debt or force you to liquidate assets. It gives you the space to focus on recovery without rushing back to work prematurely or compromising your financial security.
Standard income protection policies are designed to replace lost income due to illness or injury—not job loss. Retrenchment is considered an economic or contractual event, not a medical one, and therefore falls outside the scope of traditional disability-based cover.
However, there are specific policy options—often referred to as retrenchment cover or credit protection riders—that can be added to some income protection plans. These may offer short-term benefits (typically up to 6 months) if you’re retrenched, but they come with strict conditions and exclusions. They also tend to have longer waiting periods and require you to meet defined criteria, such as formal retrenchment under the Labour Relations Act.
If retrenchment cover is a priority, it’s important to speak to a qualified adviser who can assess whether such a benefit is available through your insurer and whether it’s suitable for your circumstances. Not all insurers offer it, and not all occupations qualify.
In any event, income protection for job loss is a different product category and shouldn’t be confused with medically-triggered income protection insurance.
Income protection benefits are typically calculated as a percentage of your gross monthly income—usually between 75% and 100% of your pre-tax earnings. The aim is to replace enough of your income to maintain your standard of living without disincentivising eventual return to work.
Insurers may apply caps depending on your occupation and income bracket. The benefit amount is also subject to underwriting, which considers your current income, existing cover, occupation risk class, and health status.
Other key variables that affect the calculation:
It’s not just a matter of replacing income—it’s about aligning cover to the realities of your financial commitments and recovery timeline.
Olemera Financial Services works with professionals, business owners, and families who want to build financial plans that hold up—regardless of what life throws at them. Income protection plays a vital role in that process.
We don’t believe in one-size-fits-all solutions. Every income protection strategy we develop is based on your real income, your financial responsibilities, and your career risks. We help you weigh the trade-offs between benefit amounts, waiting periods, and cost—so that what you choose today won’t leave you overexposed tomorrow.
With decades of combined experience, our advisers know how to structure cover that’s both meaningful and sustainable.
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