What is severe illness cover?

2016-03-24 06:00

INITIALLY, such policies covered you only against cancer, stroke, coronary artery bypass and heart disease, but now they offer financial protection for those diseases, as well as other life-altering events, such as the onset of Alzheimer’s or Parkinson’s disease, paraplegia, major burns and brain damage.

Since 1983, medical advances and a focus on healthy living have extended our lives, and with increased longevity comes increased risk of contracting a severe illness at an older age.

Dr Eric Starke, the senior medical adviser at Sanlam, says that although reliable South African statistics are difficult to obtain, international statistics place the lifetime likelihood of suffering from cardiovascular disease at one in two, strokes at one in six, and cancer at between one in two and one in three.

He says there are indications that the South African experience is not far removed from these trends.

Although it’s good news that the odds of surviving these diseases are improving, Starke says, ill health can place a significant strain on a household’s finances, which is where dreaded disease cover comes in.

The need to claim for such diseases is beginning to show in Sanlam’s claim statistics, he says.

Nicholas van der Nest, the divisional director of risk-product development at Liberty, says Liberty’s claim statistics show that the amount paid in critical illness claims is increasing year on year.

The increase from 2012 to 2013 was just over 12 percent, he says, adding that, although some of this was driven by a greater proportion of Liberty’s clients buying critical illness benefits, Liberty believes there has also been an increase in the incidence of severe illnesses, particularly cancer, in the Western world.

Van der Nest attributes the increase to greater awareness and more active screening programmes. Diagnosis of severe illnesses is happening at an earlier stage and a larger proportion of people are surviving compared with 20 years ago.

Liberty’s recent claims statistics show the likelihood of severe illness is highest in the 35 to 54 age group, he says.

Stephen van Niekerk, the head of Momentum Myriad, agrees that claims for critical illness are increasing, and he, too, refers to cancer, which affects 100 000 people a year in South Africa. Momentum’s critical illness claims statistics show that the average 30-year-old has a 25-percent chance of contracting a critical illness before turning 65, he says.

Gareth Friedlander, the head of research and development for Discovery Life, says Cansa statistics show that the lifetime risk of a man suffering from prostate cancer – the most common cancer for men – is one in 24, and the risk of a woman contracting breast cancer is one in 33.

According to Friedlander, increased longevity means that people are living with life-changing illnesses for longer and are more susceptible to multiple claims. In other words, with a long lifespan and a better chance of surviving a severe illness, you could experience a recurrence of your illness, or you might contract other illnesses.

This article is an excerpt from Business/ Personal Finance by Laura Du Preez in the December 2014 edition.


The information is only intended to be of a general nature and should not be relied upon by any part without obtaining full details from a licenced financial service provider.

You could also contact me on 083 399 3905, my office on 032-944 3051 or e-mail me on juggieg@telkomsa.net for an appointment to discuss the above or any other financial planning

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