When earning stops, what’s your safety net?

South African professionals often overestimate the financial security offered by the cover that protects their ability to earn an income, leaving many vulnerable during prolonged illness or injury. The reality is that despite years of career and wealth building, a significant gap exists between perceived financial resilience and actual protection against income disruption.

The Financial Sector Conduct Authority (FSCA) highlights the growing financial vulnerability in South Africa’s middle class. Their 2024 report shows that 79% of middle-income earners commit most of their net income to servicing debt, which limits flexibility for unforeseen costs. Moreover, 63% of South Africans report anxiety about their finances and 87% experience financial stress, emphasising how precarious many professionals’ situations truly are.

This vulnerability is often underestimated. Many professionals believe that an emergency fund will suffice if they are unable to work due to health problems. However, this assumption overlooks the extended nature of many illnesses and injuries as well as the associated medical expenses, which can sideline individuals for months or even years.

Wimpie Mouton, CEO of PPS Life Solutions, points out that emergency savings rarely cover long-term income pauses. “What professionals fail to realise is that while an emergency fund might cover three to six months of expenses, many health recoveries extend well beyond this period,” he explains. Such gaps can lead to depleted retirement savings or increased debt, threatening financial stability.

Another key concern is that typical income protection policies often contain exclusions and may have extended waiting periods, which can delay or restrict benefit payments. These complex conditions can leave professionals exposed precisely when they need support most. According to Mouton, “Standard policies sometimes require loss of income or come with exclusion clauses that reduce their effectiveness in real-life scenarios.”

PPS addresses these vulnerabilities through their Sickness and Permanent Incapacity Cover, which differs from conventional income protection products. It provides benefits based on one’s inability to work due to medical reasons rather than income loss, providing a safety net for professionals when they need it most. This structure aims to close the protection gap and secure financial stability during critical times.

Industry data supports the urgency of reviewing protection strategies. Many professionals build emergency funds intended to cover immediate expenses, but these are insufficient when facing long-term incapacitation. Without adequate cover, individuals either rely on savings meant for retirement or incur significant debt, compounding the challenges of recovery.

The repercussions of inadequate protection stretch beyond finances. The stress of mounting bills and debt during illness can affect physical and mental recovery. Mouton emphasises that protecting one’s ability to earn an income is integral not only to maintaining lifestyle but also to preserving the long-term trajectory of professional and personal goals.

Professionals are encouraged to critically assess their policies, scrutinising factors such as waiting periods, exclusion criteria and alignment with their specific income sources and career risks. Many policies do not reflect the realities professionals face when illness or injury prevents work for an extended time.

In essence, protecting the ability to earn an income should be viewed as essential risk management rather than optional protection. The financial investment of years of work requires safeguards that match the complexity and duration of modern health challenges.

Mouton concludes: “Proper protection should provide certainty at moments of uncertainty. It allows professionals to focus on recovery without the distraction of financial insecurity. This is an important consideration for anyone committed to both their career and long-term financial well-being.”

Given the uncertain economic and personal landscape, the question facing South African professionals is not whether they can afford comprehensive cover that protects their ability to earn an income, but whether they can afford not to have it. DM

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Disclaimer: Kindly note that this does not constitute financial advice. The information provided is purely informational. In terms of the Financial Advisory and Intermediary Services Act an FSP should not provide advice to investors without an appropriate risk analysis and thorough examination of a client’s particular financial situation. The information, opinions and communication from the PPS Group or any of its subsidiaries, whether written, oral or implied, are expressed in good faith and not intended as investment advice, nor do they constitute an offer or solicitation in any manner. PPS Ltd is a licensed insurer conducting life insurance business, a licensed controlling company and an authorised FSP. Ts & Cs apply.