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Mental health claims continue three-year upward trajectory

08 September 2021 Old Mutual
Dr. Kerissa Naidoo, Chief Medical Officer at Old Mutual

Dr. Kerissa Naidoo, Chief Medical Officer at Old Mutual

Disability insurance a lifeline in times of uncertainty

Depression is a leading cause of disability that affects over 264 million people around the world (WHO). Within the current economic landscape, the challenges faced by those with existing mental health conditions such as depression have only been exacerbated by remote working, school disruptions, rising unemployment and social isolation.

Despite a global spotlight on the importance of mental health, Old Mutual says that the connection between mental health and disability is still widely misunderstood in South Africa.

“Many of us don’t look at mental health conditions as a potential cause of disability,” says Dr. Kerissa Naidoo, Chief Medical Officer at Old Mutual, but as those who have battled with it know, it can be debilitating and may leave you unable to deal with the demands of each day, let alone perform at your job. In this way, coping with mental health conditions can affect your ability to earn an income.”

Locally, figures from Old Mutual’s Claims Statistics Report 2020 show a 9% rise in mental health related claims under Disability Income cover, continuing an alarming three-year upward trajectory. 76% of these claims are for major depression.

Furthermore, the majority of claimants (65%) are between 30 and 50 years old.

“While this data may not link directly to the pandemic, it is evident that Covid-19 has caused severe emotional and financial stress for many people, whether due to infections, the loss of a loved one, reduced income or unemployment.”

This financial stress is further demonstrated by the results of the Old Mutual Savings and Investment Monitor 2021, where 47% of 26 to 40-year-old respondents say they are wedged in the sandwich generation, meaning they are financially responsible for both their children and parents. More worryingly, one in three working adults claim only to have funds to last one month or less should they lose their current income or job.

“Significant emotional and financial stresses may exacerbate longer-term illnesses,” says Naidoo. “Yet due to the stigma associated with mental illness, people tend to internalise their struggle rather than seek help. Unfortunately, the longer they suffer alone, the more serious and potentially life threatening these illnesses may become. For South Africans battling longer-term illness due to mental illness, disability insurance can be a crucial financial aid to long-term recovery and well-being.”

Income or Lump Sum Cover?

While Old Mutual saw a 25% rise in disability income claims and a 27% decrease in lump sum claims in 2020, Naidoo says it is sensible to couple disability income protection with lump sum cover. Each plays an important role in helping you treat or recover from an illness or injury. Income cover helps you replace any lost income as a result of being unable to work. Lump sum cover helps you take care of the large and unexpected costs that come with a permanent disability.

“By choosing both disability income and lump sum, you have greater peace of mind that the income you cannot earn while taking time off to recover will be replaced, and that you’ll have the financial help you need to pay for the large expenses that a permanent disability may bring.”

“In the same way that you take small but essential and helpful steps to preserve your mental and physical health, it is important to apply this thinking to your financial health. By reaching out to an accredited financial adviser and putting disability insurance in place, you are making one impactful step towards greater long-term financial health.”

Quick Polls

QUESTION

As National Treasury mulls a two-bucket retirement system, mandatory contributions and preservation, regulation 28 is being amended to allow up to 40% of retirement fund assets to be invested in SA-based infrastructure… Which of the following retirement fund ‘tweaks’ would you consider most beneficial to your clients?

ANSWER

Give fund members emergency access to retirement savings
Let fund members invest 40% in infrastructure
Let fund members invest 40% offshore
Mandatory preservation when resigning from a fund
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