What is policy protection insurance?

If you become injured or are unable to work – would you be able to pay for your insurance premiums, such as medical, gap, life and disability cover? This is where policy protection insurance may come in handy.

Moneybags journalist Danielle Van Wyk, explores policy protection insurance and the importance thereof.

What is policy protection insurance?

“It is an insurance that is taken out for example on your life cover policy, that in the event of something happening like disability or retrenchment on the part of the policyholder, the protection covers the premium itself,” explained Will Keevy, head of insurance for Insurance Busters.

This cover is more commonly referred to as ‘waiver of premium benefits’ in the industry. Petrie Marx, Sanlam’s product development actuary, concurs with Keevy and adds:

“For example, after disability of the life insured i.e. when the life insured is no longer able to work and earn an income, benefits payable in the event of death may remain, in which case the insurer will cover the premiums. Another example: waiver of premium benefits are also available at death. A policy is often structured to cover more than one person, e.g. the policy holder and his/her spouse. A waiver of premium benefit at death may cover the premiums on the remaining life, should one [partner] pass away,” stated Marx.

Who is it available to?

Policy protection should be available as an optional extra on most policies.

“Policyholders need to request this [as an] extra. A lot of people however, are not aware of this extra. While it is the insurer’s responsibility to provide the policyholder with all the relevant information, the policyholder would do well to enquire about this cover,” Keevy notes.

Although it perhaps is not considered a primary form of cover that is typically made use of, ‘it may provide very valuable cover, to maintain premiums and keep a policy intact when a breadwinner becomes disabled or passes away,’ explains Keevy.

The importance

The necessity of having this class of protection is becoming more relevant in increasingly harsh economic climates. People are needing to make sure they are covered as far as possible in certain events.

“Such would be considered a crucial component of any financial plan,” highlighted Nicholas van der Nest, divisional director of risk product innovation at Liberty.

Who are the top providers?

Most medical schemes as well as medical gap cover provider companies offer this insurance as an extra on their products.

“Life insurance companies offer it as part of the product while gap cover and medical schemes often offer cover on the medical aid premium as an extra product in itself,” says Keevy.

“The cover is usually not available as a free-standing facility. There are generally therefore no top providers as such,” explains van der Nest.

Cost

The cost of this cover is product specific and depends on the policy provider or insurer. “The cost is also based on the monthly premium paid by the client and their age,” explains Keevy.

The cover is therefore typically expressed as a certain percentage of the amount of premium that is covered, Marx explains.