Is your clients critical illness solution good enough?

Most insurers offer a critical illness benefit which provides a lump sum payment if your clients are diagnosed with a critical illness.

But how much is enough? The amount of cover clients purchase is typically based on affordability as it’s difficult to quantify the impact any illness will have on their lifestyle and finances.

 

What compounds the problem is that nobody knows how long they are going to live with an illness. How can you assist them to know for sure that their cover will be enough to address the on-going expenses associated with a long but costly life with an illness?

The cover of the May 2013 edition of National Geographic reads: "This baby will live to be 120”, supporting the view that longevity is no longer a hype. Science is contributing to us living very long lives. But it’s not only healthy people who’ll live longer. Medical advances have increased the chances of surviving an illness. For example, cancer survival rates have on average doubled in the last 40 years. But it’s coming at a cost. The lifetime cost of stroke including medication and long term care is estimated at between R500 000 and R1 000 000. The lifetime cost of Alzheimer’s can easily be around R1 000 000.

So what does this mean? The good news is that we’re likely to live after an illness. The bad news is, illness coupled with a long life is likely to leave us broke. How do you ensure that your clients are protected against the risk of outliving their capital?

 

Conventional lump sum critical illness solutions are falling short. The cost of these solutions are simply too high if you want to cater for your clients’ on-going expenses. For example, providing for private nursing of R20 000 per month for 15 years would require a lump sum of R3 million. Doing a quote at any insurer will confirm that such a solution is out of reach for most clients.

So how can you offer a solution that pays more yet costs less? Ironically, by adding more benefits to the mix. Some insurers are starting to offer solutions that make recurring payments over the lifetime of the client.

One insurer has launched a longevity benefit which provides on-going critical illness payments spread out over the duration of the client’s life. In other words, a critical illness benefit that keeps on paying as they reach longevity milestones.

Another solution takes the form of a monthly impairment benefit. This type of benefit is very cost-effective, because the criteria are stricter than critical illness benefits. But importantly, it will pay out when your clients need it to.

By adding these benefits together you can make the overall solution more affordable for your clients. This is because they would need less of the expensive lump sum benefit, simply because they’ve got the bigger part of their expenses covered by benefits that pay on a recurring basis.

 

The reality is that many people live with an illness long after it is diagnosed but the uncertainty with a conventional lump sum solution is never resolved. You’ll never know whether your clients have enough.

A packaged solution that not only addresses short term expenses for those unexpected illnesses but also the uncertainty associated with longevity goes beyond financial assistance. It provides the ultimate peace of mind to you and your clients.