What questions should I ask about my group life and disability cover?

Key takeaways

  • You don’t have much say in how much group life and disability cover you enjoy, but you should make an effort to understand what you have, so you can check you are adequately covered.
  • Make sure someone can answer important questions such as:
    • How much of each type of cover you have – life, disability, funeral, severe illness;
    • The nature of the disability cover – lump sum or income;
    • The age until which the benefits continue;
    • Whether you have temporary disability cover; and
    • Whether you have the option to increase the cover and at what cost.

You may not have much choice when it comes to how much group life and disability cover you enjoy.

Your employer and the trustees of your retirement fund will make those decisions. The only decision you may get to make is whether to voluntarily top up your cover if your scheme offers this.

But you can ask questions, so that you understand what cover you enjoy. This will help you decide how best to supplement the cover your employer provides with cover in your own name, and what you would need to replace it with if you change jobs or become self-employed.

In terms of the Policyholder Protection Rules, you should be given information about the cover you enjoy. You should get all the answers to the following questions. If you don’t get all the information you need, ask your human resources department to put you in touch with the adviser assisting the company or the employee benefits company providing the life cover.

1. How much life cover do I enjoy? 

Many employers offer a multiple of your salary as a group life benefit. For instance, your life cover could be set at twice or three times your annual income.

Pay attention to what income the benefit is based on – it could be based on your pensionable income without allowances, overtime or commission.

2. Is the disability benefit a lump sum or an income?

It is important to know that you will need to invest this lump sum to provide an income, while income protection can pay you an income close to what you were earning. You need to know what lump sum cover is provided and what would be left after your debts are settled. Then you can get an adviser to help you calculate what income the rest of the money would provide or get a quote from an annuity provider to see what pension it would buy you for the rest of your life.

If the cover is for income protection, check how much of your income is covered. Typically income protection policies cover only 75% of your income.

Also check how the income protection benefit increases each year and whether it will increase should you become disabled and need to claim.

3. At what age does an income benefit end? 

Typically your income protection benefit will be one that pays a benefit until you reach the normal retirement age. At that age, if you have continued to contribute, your retirement savings should provide you with an income.


4. Will my other benefits remain in place if I am disabled?

If you are disabled, it will be difficult for you to get life cover, so ideally any group life cover that is in place should remain in place.


5. What is the waiting period and is temporary disability covered?

If you only have lump-sum disability cover, you are unlikely to be covered for temporary disability. If you have an income protection benefit, however, it should pay out for temporary disability once the waiting period has expired.

6. What definition of disability determines if I am disabled?

Life insurers use different definitions of disability – based on the extent to which you can do your job, or the extent to which you are physically or functionally impaired.

If you know which definition is used, you may be able to take out cover in your own name that is complementary because disability is defined in a different way.

7. Can I take out more cover beyond the free cover limit?

Beyond the free cover limit, you may be able to voluntarily take out more cover. This may prove more cost-efficient than taking out cover in your own name.

8. Is there a conversion benefit if I leave my employer?

A conversion benefit or continuation option allows you to convert cover you enjoy through a group scheme into cover in your own name. It becomes important if you resign from your job to start your own business, work as an independent contractor or if you join a new employer who offers lesser benefits compared with what you enjoyed before.

Without the conversion benefit, you will need to apply for cover in your personal capacity, which will be subject to individual underwriting.  This could result in exclusions on your policy, particularly if your health has deteriorated. Read more: What does it mean if there is a conversion benefit?

9. What are the policy exclusions? 

If you participate in sports or hobbies that could put your life at risk, such as sky diving, ask about an exclusion on this cover.

If your employer requires you to travel outside of South Africa, ask if the cover extends to the countries you visit, because some policies exclude certain countries. Read more: What are the common exclusions on life, disability and funeral policies?

10. Is there a severe illness benefit and for how much?

If your group life cover offers severe illness cover it is likely to be a lump-sum benefit. It may be paid in accordance with the severity of the illness or the stage it has reached. This benefit is aimed at complementing your medical scheme cover, any gap cover you have and any disability benefit. It can be used to cover costs such as wigs (if you have treatment for cancer), special wheelchairs, trial medical treatments not yet covered by your medical scheme, and so on. Also check the illnesses covered, especially to see if it includes any illnesses that members of your family have suffered from in the past. Read more: What illness does my severe illness policy cover?

11. Is there funeral cover, who is covered and for how much?

If your group life cover offers a funeral benefit, check how much it will pay out and for whose funeral. Also ask about the waiting periods and for how long the cover is in place.