South African life insurers offer a wide range of cover for severe illnesses, from accelerated benefits to stand-alone policies. Traditionally, severe illness cover was offered for the four conditions that accounted for the most claims: cancer, coronary artery bypass, heart attack and stroke. However, policies have evolved, and now offer cover for a comprehensive range of between 100 and 300 illnesses.
With severe illnesses having a significant impact on your lifestyle, and with potential to leave you in critical condition, its’s becoming more important to be informed and prepared. We answer the most common questions, for your benefit.
What benefits are included in a severe illness cover?
Severe illness cover is a policy or benefit, that pays you a lump sum upon a diagnosis of a serious illness, such as a stroke, cancer, or a heart attack. It ensures that costs beyond medical expenses, are covered and alleviate you from having to deal with financial stress, while challenged with the illness.
The critical illness cover aids your recovery journey. Costs associated with your illness, private nurses, living expenses, au pairs to look after your children and cases of unpaid leave, are all included to ensure that your health remains top priority. You can also use this cover to adjust your home environment, to better enable you to live and move around, comfortably.
With increased claims in critical illness, it is more important than ever, to get insured. It is also more critical for you to have greater awareness about health, wellness and lifestyle, as a preventative measure for serious illnesses, which can be diagnosed earlier.
I have a medical policy, is this the same as critical illness cover?
A medical insurance policy pays for the costs of medical treatment or hospitalization. In contrast, a critical illness insurance policy gives you a lump sum payment upon diagnosis of any potential critical illnesses covered. It also pays upon death or disability.
Ideally, you should have sufficient medical scheme cover for your healthcare needs and an income replacement policy that covers you for loss of income in the event of a disabling illness or injury.
It’s important to remember that with critical or severe illness cover, you are provided with a sum you can use for other needs that may arise if you fall ill. Don’t make the mistake of
under-estimating the medical expenses that comes with critical illness, or the extent to which these may not be covered by your medical policy. Even comprehensive scheme options do not cover all medical costs, and you may incur the costs of rehabilitation, home nursing or ongoing chronic medication. Your scheme may cover these only to the extent that you have day-to-day benefits, such as a medical savings account.
Is it possible to have a varying illness, disability, and death policy?
South African insurer, BrightRock, for example, offers severe illness cover as “additional expense cover” with the option, on specific conditions, to take part of the benefit as a lump sum and part of it, as ongoing payments for a set period.
On a stand-alone policy a claim will not affect your life or disability cover. Alternatively, you can take out what is known as an accelerated rider, or benefit, on your life and/or disability policy. This is cheaper, but if you claim on the severe illness benefit, you will get an early payout as part of your life or disability cover, and this cover will reduce accordingly. In the event of death or disability, your dependants or heirs will receive your life benefit, minus what has been paid out. Consider this option carefully against what your needs and those of your dependants would be on diagnosis of an illness, on disability or on death.
How do I select which insurer to partner with?
Your severity level, pay out amount, benefits and period for cover are important to consider, when looking for a suitable insurer.
Life insurers that belong to the Association for Savings & Investment SA (ASISA) use its Standard on Disclosures for Critical Illness Products (Scidep) grid, which includes standardised definitions and severity levels of the four main dread illnesses. The grid can help you to compare the cover across life insurers.
Running concurrent with the severity of a critical illness, is the percentage of a payout. Some policies pay out the full assured amount on diagnosis of a dread disease that meets a particular severity level; others, according to a tiered system of benefits, and will possibly pay more, if your severity reaches a higher level. Insurers that offer partial payouts, linked to the level of severity of an illness confirm that, tiered benefits ensure that you have appropriate cover when you need it. The tiered benefits also enable them to cover a wider set of conditions.
Always consider the granular details of your benefit. If you receive a 100-percent payout for a particular illness, you may not be able to claim for that illness, or a related event again.
However, your insurer may provide that after such a claim, your cover will be reinstated for illnesses and injuries other than the one for which you claimed. Take this a step further and find out if there are costs, for reinstating cover, that may be built into your premiums when you take out the policy.
Is it okay if I get an illness cover at age 45?
The risk of contracting a dread disease increases as you get older, as do the premiums, so it makes sense to consider the period of your cover, at a younger age. Severe illness cover is suitable for anyone vulnerable to the financial implications of suffering from a severe illness. You can contract a severe illness at any age, but, according to BrightRock, the chances start increasing between the ages of 40 and 65. You may even have a need for this cover if you are retired or not working and you believe your family would need financial help, should you fall ill.