Picture this: you wake up one morning and you can't go to work. Maybe it's appendicitis, maybe it's an unexpected injury. Either way, your body needs time to recover - but your bond, your groceries, and your kids' school fees didn't get the memo. They all still need to be paid - on time, as usual.
That's the gap temporary income protection (TIP) cover is built to fill. In plain terms, it pays you a portion of your income each month while you're temporarily unable to work, so that you can focus on getting better instead of stressing about how the bills will get covered. It's not about planning for the worst - it's about making sure that if life throws you a curveball, you've still got a roof over your head and food on the table while you find your feet again.
What is temporary income protection cover?
Temporary income protection (TIP) cover provides a guaranteed, predetermined monthly payout if an employee is unable to work due to illness, injury or disability. This insurance protects against the fact that being temporarily or permanently harmed, injured or ill, may physically stop someone from being able to earn an income. This monthly payout helps to pay off any recurring expenses that don't stop, just because you had to slow down. Things like your children's school fees, electricity bills, groceries, mortgage payments, medical appointments, the payout can cover these. The payout amount is expressed as a percentage of the policyholder's annual net salary and is always capped at a certain amount. It is important that you check the cover limits for this benefit, to ensure that it is able to support your unique combination of monthly expenses.
Why is TIP cover necessary?
It's no secret that our lifestyle is ruled by how much money we make and by how much we choose to and have to spend. It's also no secret that a serious illness or a freak accident can take away this income in a split second, leaving us with the painful task of dipping into savings in order to stay afloat. That is where an income protection plan steps in and provides a monthly, steady source of income when you can no longer work, nor earn an income. The type of career or occupation that you have does not influence this insurance - it is a benefit that can provide a safety net and peace of mind to any and every employee.
An unexpected stop in your flow of income, can cause a massive barrier between yourself and the achievement of your financial goals, be it investing, saving or paying off debts. TIP cover ensures that the flow continues, no matter the storm or misfortune.
When should I get TIP?
There are four common scenarios in which TIP cover is an almost necessary solution that mitigates any risks that yourself or your loved ones may face in your financial future. These scenarios are as follows:
- If you are the main or sole breadwinner in your household/family: a sudden loss of your income would result in devastation for your family.
- If you do not have an existing amount in your current savings account that is satisfactory for your current and anticipated expenses.
- If you have debt that you are currently paying off.
- If your job is flexible in nature, or is freelance: your income is inconsistent and a sudden injury could provide the stable income that is necessary for recovery and financial sustenance.
How does TIP cover work: the structure and inclusions
Payout is provided for a specified time period, with the main intention of ensuring your financial security in the long-run. An unexpected stop in your flow of income, can cause a massive barrier between yourself and the achievement of your financial goals, be it investing, saving or paying off debts. Unlike most benefits, this benefit pays out a monthly sum, not a once-off lump-sum payout.
This type of benefit often includes a deferral period, which is the period in which the policy will not pay out, should anything happen. This period needs to lapse before the policy can begin to pay out. The deferral period is agreed upon when the policy is drawn up and is often different for different people. Typically, the longer the deferred period, the cheaper the premiums.
It is important to note that this benefit, like most others, is customisable to you and your financial needs. You are able to decide on the monthly payout amount (as a percentage of your salary), the amount of consecutive months in which you will receive this payout, and these details may be updates and reviewed should anything in your life drastically change.
Simply's Temporary Income Protection (TIP): the band-aid when life doesn't go to plan
Our TIP benefit is available under our Flexi Staff Cover policy, and can be bought by an employer, for their employees. This benefit is paid to an employee when they are unable to work as a result of an injury or illness (which includes disease or surgery). Payments are for a fixed maximum term, which is stipulated in the individual's policy and is predetermined.
The cover limit is R100 000, and is capped at an employee's take-home annual salary. Payout of the benefit will cease at the end of the selected and predetermined period, or when the employee returns to work, whichever occurs sooner. With Simply's temporary income protection, the payment period options (number of consecutive months that the policyholder will receive payment) are 6, 12 or 24 months.
As has been mentioned, the policy contains a deferred period, which is the time from when you first become unable to work, to when the monthly benefit starts to be paid out. The options are 1, 3, or 6 months. This benefit ends when you turn 65, even if the policyholder remains employed after that.
TIP cover provides a stress-free environment and a sturdy financial cushion for you to lean on when a lack of income would typically send you into a downward spiral. To find out more about the different cover options available, visit simply.co.za/staff-cover.
Don't wait for the curveball
Here's the honest truth: none of us plan to be off work. But income doesn't pause when life does, and that's exactly why temporary income protection is worth a proper think. It keeps your money coming in when you can't earn it yourself - turning a potentially scary few months into something you can actually get through.
So if your income is the thing holding everything else up, it makes sense to protect it. Take the time to understand your options, ask the questions that matter, and choose a cover that fits your life and your budget. And when you're ready, we'll be right here - ready to keep things Simple, and to catch you if you stumble.
Simply Financial Services (Pty) Ltd is a registered financial services provider (FSP 47146). T&Cs online.