The lump sum disability benefit will normally taper down from a member’s full cover to zero over the five year period leading up to the retirement age of a group.

The reason for this is that lump sum disability is an occupationally linked disability benefit and as a member gets closer to their retirement age, so the loss of earnings they will incur due to a disability diminishes.

Some insurers will quote without any tapering but it comes at a cost and if its physical impairment or bodily loss cover that you are looking for then there are other benefits that provide this cover too.

The tapering calculations differ by insurer but in simple terms the benefit reduces on a monthly basis at a rate of 1/60th the value of the benefit for Capital Alliance, Hollard and Sanlam. Old Mutual is different in that their benefit is limited to the lesser of the full benefit and the member’s monthly salary multiplied by the number of complete months left until the benefit ceasing age.

Thank you and regards,
The TSA Team

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All information provided is intended to inform and explain, but please remember to always check the current terms on policies when considering options and advising clients.