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South Africans urged to seek financial advice to lessen medical costs

28 March 2013 Gregory Setzkorn, FIA

According to the Council for Medical Schemes (CMS) latest statistics only 16.9% of the South African population is covered by a private medical aid. Product complexity and affordability are among the main reasons behind the poor uptake of private medical

Gregory Setzkorn, Chairman of the Healthcare Benefits Committee at the Financial Intermediaries Association of Southern Africa (FIA) says that cost is often the biggest consideration for consumers when choosing a medical scheme provider. “Unfortunately, by simply selecting the cheapest option consumers may be placing themselves under further financial strain as the cover may not be comprehensive enough for their medical requirements.”

“Consumers are more likely to find a medical scheme provider that fits their budget and ensures their medical costs are covered in the event of a claim if they use the services of a qualified and experienced financial intermediary,” says Setzkorn. “Consumers can easily become lost in the jargon and red-tape found in medical aid policies with the result they choose an inappropriate scheme or benefit option and risk frustration at claims stage.”

“Intermediaries are there to help consumers understand their responsibilities while at the same time explaining the terms and conditions set out by the medical scheme that must be complied with in order for claims to be processed quickly and properly.”

Consumers’ needs develop over time according to changes in their lifestyle. “Consumers may find themselves paying too much for their medical aid because their policies were not updated accordingly,” notes Setzkorn. “Financial advisers will advise consumers of any potential risks as well as analyse their lifestyles to ascertain what scheme would be most suitable.”

A professional intermediary will also actively review his or her client’s policy on a regular basis to ensure that it is up to date at all times.

With this in mind it is essential that consumers ensure they use the services of an accredited and reputable financial adviser when transacting for private medical cover. Setzkorn provides some tips that consumers should bear in mind when choosing an intermediary:

• Does your intermediary hold the necessary licences?

All financial advisors must display a copy of their Financial Advisory and Intermediary Services (FIAS) licence at their office. It is important to ask to see a copy of their licence and make sure that the advisor is licensed to sell the products they are advising on. Consumers should also check that intermediaries providing medical scheme advice are licenced with the CMS.

• Does your intermediary belong to a professional body?

Intermediaries who belong to professional financial organisations, such as the FIA, are reputable, more informed and therefore in a better position to provide professional advice. Furthermore, affiliation with a professional financial body means the intermediary will be kept up-to-date with regulatory and legislative changes, industry developments as well as having access to vital training opportunities.

• Make sure a Financial Needs Analysis (FNA) is performed

Your intermediary should perform a FNA to determine your financial needs and risk profile. A medical schemes broker goes a step further by conducting a Medical Needs Analysis to ensure that the medical scheme you choose is a suitable match for both your financial and healthcare requirements.

• Find out about other product options

When looking for a new product provider, it is important to ask for a second or third option and not to simply accept the first product being offered.

• What fees or charges will you pay?

Clients must understand what fees are charged by the product supplier. Fees are often difficult to understand and may not be easily spotted in the policy. An intermediary can explain the fees or costs involved. Some products may not have any fees but may charge higher costs.

• Does the intermediary have professional indemnity cover?

As from Sept 2009, Professional Indemnity is mandatory in financial advisors’ disclosure documents. Intermediaries are required to tell their clients whether or not they have professional cover in terms of the Policyholder Protection Rules (PPR). Using an intermediary who has this cover is critical as it provides protection to the client in the event of the intermediary being found negligent.

“The benefits of an intermediary when selecting medical insurance cannot be understated. By keeping these important tips in mind, consumers can find a qualified financial advisor to assist them in making crucial financial decisions best suited to their individual needs,” concludes Setzkorn.

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