22 August 2017
The financial burden of dealing with a dread disease like cancer – the out-of-pocket medical costs, unforeseen non-medical expenses like in-home carers and additional childcare – can wreak havoc on one’s finances.
“Dread disease cover can offer massive financial relief as it pays out a lump sum to cover these unexpected expenses,” says Sanlam’s chief medical advisor, Dr Marion Morkel. However, she warns consumers to choose their cover carefully, otherwise they may end up paying higher premiums for a product that covers many illnesses they will probably never claim for, while compromising on cover where it’s needed most.
Although selecting dread disease cover can be daunting due to the sheer number of illnesses that exist, Morkel says there is a way to compare apples with apples, with the help of a qualified financial planner. “Around 85% of all dread disease claims are made for just four medical conditions. The four steps below give guidelines for comparing products, with step four perhaps being the most important – evaluating the likelihood of an illness incident.”
This is the easiest one – and the one most people stop at when analysing dread disease cover. It refers broadly to the medical conditions that are covered such as a heart attack, cancer, stroke or Alzheimer’s. Some products cover a very long list of conditions, while others have a shorter list, which can make them look like less comprehensive products. But looks can be deceiving and that is why it is critical to move on to pillars two to four to get the full picture.
Keep in mind that dread disease products do NOT offer cover for every stage or severity level of every illness or condition. To keep the product affordable, each claim event has a detailed description of exactly how the medical condition must present itself, before a claim will be paid. Some definitions can be so strict that a claim will only be paid in the very late stages of the disease or only when unusual treatment has been administered. With the help of a financial planner, it’s important to understand the definition of each claim event to determine how appropriate the benefit is for you.
Digging a little deeper, it is vital to review the design – which is the layout and pay-out structure of the product, i.e. what percentage of total cover will be paid out for a certain medical condition. For instance, one product may pay out only 50% of the policy for a defined heart attack, while another will pay out 100%. Or, one product will pay 25% for a stage one cancer, while another product will pay 100% for the same stage. One product may cover a claim event for a 5-15% benefit, while another product does not cover this claim event at all. To gauge whether or not these percentages are likely to be adequate, the next element should be closely analysed.
This is probably the most important pillar to examine. How likely is it that you will actually get a certain condition? Around 85% of all dread disease claims are for just four medical conditions: heart attack, cancer, stroke and coronary artery bypass surgery. A product with a long list of claim events is not necessarily a better product if these four diseases are not comprehensively covered.
Dr Morkel says Sanlam’s innovative new dread disease product is designed to accommodate this. “Knowing that, statistically, certain illnesses are far more common, our dread disease product allows you to select the diseases you are covered for or to top-up an existing policy so that you have more cover for the illnesses you are most likely to be diagnosed with.”
She hopes that this option will encourage people to take out the right cover – even in tough economic times and will discourage them from cancelling their policies when their budgets are strained. “As tempting as it can be to cancel insurance, the statistics of South Africans affected by dread disease are not in our favour. There certainly is a great imperative to be well prepared for cancer and other major illnesses.”
Dread disease cover is a critical part of a holistic financial plan which should be designed in conjunction with a certified financial planner. For more information, visit