Over decades, a lot of South Africans have had to reply on the government for financial support should they retire or become disabled or couldn’t carry on working due to serious illness. There just hasn’t been much income protection. There’s simply been poor planning and lack of knowledge on part of the public. So it’s time to understand just how important an income protection plan is.
What is Income Protection?
Have you heard of an income protection plan?
First of all, if you receive monthly pay outs on your income protection cover plan, and not lump sum pay outs, you can enjoy certain tax benefits. Essentially, SARS lets you claim all your premiums back from your income protection policy. Those premiums go towards protecting your wages or salary should you become temporarily or permanently disabled.
Income Protection Insurance
An income protection plan is an inexpensive way of protecting your salary. Too many people don’t realise this and take out expensive benefits on risk cover. But they never claims back from the income protection plan when it comes to doing tax returns.
Do check your income protection policies and chat to a financial advisor if you think you have such a benefit. If you don’t have a salary protection plan right now, it’s a good idea to take one out. After all, it’s self-funding.
Is an Income Protection Plan the Same as Salary Protection Insurance?
Let’s take a look at an example of income protection insurance South Africa.
Take Mr Smith and his income protection plan. He started paying a monthly premium of R100 to protect his salary of R10 000. Come the end of the tax year, Mr Smith has contributed R1 200. So he gets hold of his financial advisor, or calls his insurance company or even downloads his tax certificate to send to SARS. SARS will then let him claim his income protection premiums in full when he files his SARS tax return. That’s how an income protection plan can benefit you.
Income Protection Plans
However, effective 1 March 2015, there will be changes to this tax deduction. You won’t be able to claim income protection retrenchment premiums on the SARS tax return.
But that’s no reason to go cancelling your income protection plan. You can still get the fully insured amount without the worry of being taxed on the benefit that is paid to you. At present, life cover premiums for an income protection plan are deductible, but the insured benefit is still taxed in SA.
Is Income Protection Long Term or Short Term Insurance?
An income protection plan from the likes of Frank income protection and the Liberty income protection plan, are short term insurance solutions, with long term benefits.
Can you afford to be without an income protection plan South Africa?
To get your income protection plan quote today, fill in the form on this page and submit it.
* Here’s a YouTube video about income protection planning