Why James needs Salary Protection

Can you identify with James?

He’s just your average bloke trying to make a living. It’s tough when you’re a single parent trying to put food on the table for three children at the best of times. But right now, James is in big trouble.

In fact, life was on the up-and-up for him until recently. As a stock controller at one of South Africa’s largest food retailers, he’s good at what he does, and the company he works for, has been around since the beginning of time. This was of course, till last week Tuesday…

James boarded a taxi, as he does every day of the week. He paged through his newspaper as he does every day, but today was destined to be different. Ten minutes later, the taxi in which he was a passenger, got hit by a truck. James couldn’t recall much of what happened between then and the moment he awoke in hospital.

Fortunately for James, his only damage was a few minor lacerations and two broken legs, but it’s enough to keep him absent from work for 6 months. This is precisely the problem.

No work means no pay

Since James works for a large company, he happens to have group life and disability cover. So you’d think that since he’s disabled, the disability cover would pay. But that’s not the case.

The disability cover is of the lumpsum variety, and only pays out on permanent disability. Since James is expected to make a full recovery in six month’s time, he can’t claim.

Fortunately he does have sick leave owing to him which should take care of the first three months. The problem is the final three months. He might need to make a loan or how else will he take care of the kids?

Which is where Salary Protection comes in

A Different Life Salary Protection Policy would have replaced James’ monthly income if he was disabled through:

Illness or
Injury

and unable to work

Here’s the ‘Cliff notes’ version of how it works:

The income would kick in after he had been off work for 3 months
The income is limited to 75% of what James had earned after tax immediately before he had the accident
This benefit will pay until James recovers in 6 months’ time or until he turns 65 (if the disability becomes permanent) or until he dies (if that happens earlier)

Why James needs both Salary Protection and group disability cover

Permanent versus temporary disability

We did mention this above, but the one major problem James has with group disability cover, is that lumpsum only pays out if he’s permanently disabled and unable to perform his occupation.

Weigh that up against Salary Protection which pays out upon both permanent as well as temporary disability caused by either illness or injury

Which of the two is better value for money?

Well let’s see:

What would it cost for James to replace his income with a Different Life Salary Protection Policy?

James earns R10, 000 a month before tax.
75% of his after tax income is insured with Different Life. This amounts to R7, 286 a month.
Assuming James is 25 years old, he will receive that income until 65 should he be permanently disabled.
We’re talking R7, 286 multiplied by 40 years multiplied by 12 months. In our books that’s R3, 497, 280 which will get paid out.
And did we mention that this would have cost James as little as R67 a month? Find out how much it could cost you by clicking here.

How much would it cost if James had to buy lumpsum disability cover instead?

James decides to buy R3 million disability cover at Different Life
This would cost him R141 a month. Find out how much it would cost you by clicking here.

And finally there’s the longevity problem.

The Different Life Salary Protection plan guarantees that James will get his income till 65. This means a guaranteed income for 40 years if he’s disabled at 25. The Different Life Disability cover also guarantees that he will get the R3 million paid if he is permanently disabled at the same age.

“I’d rather have the R3 million in my pocket” we hear you say. But think about it… James might live to be 80. That means the R3 million must be invested in such a way as to provide him with an income for the next 55 years and outperform inflation.

It could be argued that James should own both products:

The Salary Protection at R67 a month to replace his income till 65, and
The Disability Cover at R141 a month to take care of his retirement planning and debt.

The question we know you’ve been dying to ask.

Does the Different Life Salary Protection plan cover retrenchment as well?

Unfortunately the answer is no.

Five questions we believe you should ask yourself:

If I’m ever disabled, would I prefer a guaranteed income till I turn 65 or would I prefer the equivalent in cash without the guarantee?
How much lumpsum Disability Cover would I need to buy to replace what the Salary Protection cover would pay between right this moment and 65?
Which of these two works out cheaper?
What happens if I make a poor investment decision with my lumpsum disability payment?
Am I willing to gamble only on insuring for permanent disability cover or should I insure against permanent as well as temporary disability?

With Salary Protection all the investment risk is removed – You become disabled and you get paid.

At Different Life it’s about making your life different. Choose to make your life different today.