Old Mutual launches unique 100% disability cover product

Old Mutual Corporate has launched South Africa’s first disability product that enables companies to provide employees with 100% income replacement cover for the duration of their disablement, inflation-beating annual increases and additional maternity benefits.

The Group Income Protection’s 100% income replacement cover is a significant enhancement to the typical disability income benefit of 75% of a person’s monthly earnings.

According to Dean Boshoff, Group Assurance Executive at Old Mutual Corporate, while there are a few local products that offer a top-up benefit which takes the 75% income replacement ratio to 100%, these are generally restrictive and based o­n certain severe or permanent medical conditions, which means that o­nly a limited number of people qualify.

Boshoff says the traditional argument for not providing the 100% benefit is that doing so may be seen as a disincentive for disabled employees to return to work. However he believes that by taking a different approach to benefits, this restriction can be managed.

“The truth is that most people actually want to work and earn an income. Additionally, every claimant of this benefit will of course need to continue to satisfy the definition of disability. This is a very careful and thorough assessment process and claimants cannot simply ‘choose’ to keep a disability benefit.”

He says that for many people their salary is o­ne of their greatest assets and should therefore be insured in full.

“Many people are finding it tough to sustain themselves o­n their monthly salary as it is. These daily costs do not decrease when someone gets sick or becomes incapacitated. In fact, expenses often increase significantly. Furthermore, disability is not necessarily a temporary state. This means that, should a worker become disabled, their living costs will significantly increase until retirement. Therefore, in addition to the 100% income protection cover, employees can now also benefit from annual increases of CPI +1% and CPI +2% - another unique offering in the local market.”

Boshoff explains that maternity leave is another event that impacts o­n female employees’ income and productivity. Employers can now add the Maternity Leave Cover option to their Income Protection package for refunds of up to 4 months of maternity leave benefits.

Boshoff says that implementing this comprehensive benefit requires a strong business model and best of breed disability management practices. These are areas Old Mutual Corporate specifically targets as a differentiator and not all service providers will be able to support such a design.

“We urge employers to consider insuring 100% of income – and the effect that a 25% decrease in salary would have o­n the lifestyle of their employees if they became disabled. The nature of this product is to start with what people need, rather than focussing o­n what ‘can’t’ be done,” he says.