A dread disease diagnosis like a cancer, heart attack, stroke and many others may have a serious impact on your quality of life, and you need to ask yourself the question: What would your finances look like if this happened to you?
The sudden emergence of COVID-19 was devastating and almost overnight, many South Africans became acutely aware of the fragility of life. This reality suddenly brought into question whether we would be able to sustain our quality of life due to the potential long-term effects of the disease.
For those with some form of health insurance or life cover the “knee jerk” reaction was to fervently unearth their life policy documents, medical aid schedules and gap cover to peruse the fine print and benefits, and to inundate insurers with queries. Some clients were left reeling to discover that they were either not covered or under-covered.
Covid-19 therefore brought into perspective a pertinent issue – the lack of cover for the ‘Big 4 illnesses – cancer, stroke, heart attack and coronary bypass – which are much more common across society. According to the Heart and Stroke Foundation South Africa, in 2020 around 10 people are likely to suffer from a stroke every hour, which lead to nearly 70 deaths a day nationally.
Old Mutual claims data for 2020/21 showed that the ‘Big 4 made up 72% of all severe illness claims.
Old Mutual Illness insurance
Illness insurance covers the insured person who suffers from and meets the requirements of a qualifying severe illness as confirmed by its medical officer. The insurance pays out if you have a severe illness in accordance with the standardised critical illness definitions of the Association for Savings and Investment South Africa (ASISA).
These illnesses include cancer, heart attack or stroke, and many other diseases that could affect your cardiovascular, central nervous, gastrointestinal, and respiratory systems. There is also cover for endocrine diseases, HIV/Aids, sensory systems, trauma, lifestyle and autoimmune diseases.
A severe illness may carry a high risk of mortality or may negatively impact your quality of life and daily function. There are functional impairments related to the severe illness that also qualify under the premium protection functional impairment benefit. The Severe Illness Cover benefit will pay a percentage of the cover amount that depends on the severity of the severe illness if the insured person suffers a severe illness and if any relevant survival period is met.
Old Mutual’s Illness insurance pays a single tax-free amount from R100 000 to R6 million if you have a severe illness. This pay-out can be used to cover rehabilitation costs, travel expenses to treatment centres, modifications to your home or car and day-to-day expenses while taking time off from work to recover.
So how does it work?
With the help of a financial adviser choosing the right cover for serious illnesses can be smoothly facilitated in three quick and easy steps
1. Choose your cover such as Old Mutual’s Illness insurance.
2. Enrich your cover by opting for extra benefits such as Top-up Benefit, Mild Illness Benefit, Child Illness Benefit, For Women Benefit or Returning Illness Benefit, and
3. Choose your add-ons such as Cashback* or Premium Protection which come at an extra cost.
You have the option to get cover of up to R1 million without going for medical tests and are covered from the inception of your policy for up to 30 days before paying your first premium.
Myths about severe illness cover
So why don’t people opt for illness insurance? The first myth is that you only need it when you are older, such as in your 50s and older. However, Old Mutual’s claim statistics for 2021 observe that in men we see claims from the age of 22 and for women from the age of 20. It is safe to say that anyone at any age can be afflicted with a severe illness.
Many young adults under the age of 25 are students or in entry-level occupations with low-income thresholds and therefore customers may elect to take out illness insurance for their adult children so that the child will be the insured person, but the parent will be the owner and premium payer.
The second myth is that medical aid pays for all costs. Medical aid cover pays specifically for the treatment of medical conditions and payment is mostly subject to annual payment limits. Gap cover is intended to provide cover towards the shortfall of treatment costs not covered by your medical aid and was specifically designed to supplement your existing medical aid cover.
Illness insurance plays a different role. It helps you take care of your financial responsibilities while you are busy focusing on recovery. These three actually complement each other and can all fit into your financial plan.
How much cover do I need?
There is no exact science when determining what level of cover you would need but a reputable financial adviser will be able to assist you with a full needs analysis. Having a well-informed partner to help you navigate the financial and administrative complexities of the financial services industry is indispensable.
In the case of illness insurance, the adviser will consider for example your age, general health status and lifestyle factors in order to predict how much you may need. It is also prudent to factor in your quality of life at the time of diagnosis, during treatment and recovery, and post recovery when making a determination on the quantum of cover you may require.
Kim Gillot, an Old Mutual customer, was diagnosed with breast cancer in February 2017 at the age of 32 without having any family history of the disease, and a couple of months later her claim was finalised and she received her severe illness pay-out.
“The money was a Godsend,” she said. “It really helped in so many different ways by taking the financial burden off me. I got really good advice in investing and how to grow that money to sustain myself. Everyone should take out insurance.”
Ideally, you in consultation with your financial adviser, should ensure that your severe illness cover increases annually in line with inflation so that the value of your benefit will not reduce over time and that, if you ever need to claim, your pay-out has held its value in real terms.
In the event of a big health emergency, such as cancer, a heart attack, or a stroke, your illness insurance could be the only thing standing between you and financial ruin. Many people assume they’re fully protected with a standard health insurance plan. However, with the exorbitant costs of treating life-threatening illnesses it is also important for a customer to have medical aid, gap cover and illness insurance incorporated into their plan, since they all serve a different purpose and work differently when you’re diagnosed.
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer.
Notes:
• Every 5 years, on the cashback anniversary, we will pay back 15% of all premiums received for the contract since the previous cashback anniversary and while cashback existed on your contract.
• Cashback will not be paid if the contract is not active on the cashback anniversary.
• Cashback would, on average, increase your premium by 12.5%.
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