CAPITAL PROTECTION COVER - IMPAIRMENT AND CAPITAL DISABILITY
By Franz Smit
On a regular basis I come across new clients who swear that they are fully covered for disability, however, after examining their insurance it becomes clear that they have the wrong impression of what they will be protected against. This article will give you a good idea of what you have, but it is much more technical than what can be covered in just one article, so this is in a nutshell.
The two main types of capital protection are capital disability and impairment. There are fundamental and technical differences between these two and it is very important to understand this.
This is a lump sum disability product and although there are variables on the market, it basically pays the lump sum amount out to you in the event that you become permanently disabled. The general purpose of this product is to enable you to cover long term debts and responsibilities.
Capital disability will either be occupation based or own/similar occupation based.
Own occupation based will have a successful claim if you cannot do your exact job because of a disability, whereas own/similar will look at your ability to function in another occupation. What this boils down to is that to have a successful claim at own/similar occupation, it would mean that you can't work at all.
Activities of daily living also come into play with some insurance companies. In short, it is a benefit and looks at specific things such as your ability to feed yourself, drive a car, etc.
Impairment is a lump sum or monthly insured amount and looks at the bodily function at claim stage, so it has nothing to do with your occupation. It has its place in the market for clients who only want to insure for worst case scenario and/or for certain occupations where disability is a serious risk.
Impairment cover will pay out a percentage or full insured amount depending on the product chosen, and will pay for specific impairments such as loss of eyesight or bodily function
Some more high risk pilots will not qualify for disability but will qualify for impairment.
The outlook is good
We have managed to make great strides in the disability protection cover for the aviation industry and will continue to push the insurance world until we are satisfied that the best possible cover is in place.
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