Capital Disability Benefits

Eugene Taljaard - Capital Disability benefits are normally paid out to a member of a scheme if they are, in the eyes of the underwriter, totally and permanently incapable of carrying out their own or similar occupation or sometimes (depending on the contract) any occupation. Notoriously difficult to claim from!

This type of benefit is mostly attached to the employer’s death benefit scheme but can in some circumstances be a “stand alone” product. Typically, after a waiting period (normally 6 months) a lump sum equal to the death benefit (subject to certain maximums) is paid to the disabled member.

Should the member be within 5 years of retirement the benefit reduces by 20% per annum until at retirement age it ceases to exist! This could be detrimental to a member of such a scheme should be or she be misfortunate enough to suffer a severe disability say a year before reaching normal retirement age! Naturally underwriters will give you all the reasons under the sun for this reduction!

There is one innovative underwriter however that will not reduce the benefits in the 5 years prior to retirement and do not apply a waiting period. What’s more, in less severe cases they will pay out a 50% benefit.

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