If you are 20- or 30-something, you probably believe you are way too young and healthy to take out life assurance. But recent scary statistics released by Liberty Life should challenge your belief: they reveal that cancer is the leading cause of claims paid by the assurer in 2015, and that it often hits young people.
One in four claims paid by Liberty were for cancer, and the proportion of claims for cancer is increasing, even at younger ages.
Cancer was the second-highest cause of claims among what Liberty calls “young achievers”, who are starting out in their careers, accounting for 12.3 percent of claims – higher even than those for motor vehicle accidents, at 11.9 percent. Motor vehicle accidents, especially in a country like ours, are typically cited as the reason young people need disability or income protection cover.
Even more alarming, in young parents cancer was the cause of most claims: some 22.5 percent.
These statistics are for claims on policies that provide cover for death, disability or dread disease (illnesses such as cancer, strokes and heart attacks).
But the statistics also reveal what we already know: many people now survive cancer. So the bulk of claims paid were not paid as result of the life assured dying, but rather for the life assured surviving a severe illness.
Claims for loss of income are also minor compared with the claims for severe illness – what Liberty calls “lifestyle protection”.
Liberty’s claims payments for severe illness cover increased by 50 percent from 2014 to 2015, in part because more smart people are taking out this cover but also because the prevalence and the early detection of cancer are growing.
Liberty’s statistics are not unique. Sanlam’s claims statistics for 2015 show that 60 percent of its dread-disease claims were for cancer. At Momentum, 34 percent of its dread-disease claims were for cancer, and at Old Mutual the figure was 57 percent, and at Discovery they were 38 percent.
Yet, cover against death is still the most popular form of life assurance. Nine out of 10 people buying a policy from Liberty selected this benefit but far fewer bought severe illness cover.
The take-home message for 20- and 30-somethings is that while cancer claims are obviously higher among older age groups, an increasing proportion of claims are from among the younger age groups.
Liberty divided its policyholders into four groups. In addition to the young achievers and young parents, what Liberty terms “established providers” are people at the peak of their careers with older children, while “empty nesters” are those winding down their careers.
Cancer is the leading cause of claims among young parents (22.5 percent), established providers (26.9 percent) and empty nesters (25.6 percent).
An interesting statistic put out by Old Mutual with its claims figures this week is that 60 percent of all claims are for people under 45.
More scary information in Liberty’s statistics is the breakdown by gender. For men, one in five claims was for cancer, while for women, one on three claims was for cancer. The top four cancers in women are breast cancer, colon and rectal cancer, endometrial cancer and skin cancer. In men, they are prostrate cancer, skin cancer, colon and rectal cancer, and brain cancer.
Why, you may ask, if you have a good chance of surviving cancer, and you have medical scheme cover and loss-of-income cover, do you also need severe illness cover for cancer?
Your medical scheme offers crucial cover that you shouldn’t be without. But cancer treatments are expensive and schemes, in trying to control costs, have rules about what they do and do not pay for.
The country’s largest medical scheme, Discovery Health, for example, has a R200 000 or R400 000 limit on oncology claims on its mid-level and higher options, and thereafter there is a 20-percent co-payment on claims.
What if your cancer is a rare one and you wish to go to specialised treatment centre, or what if your doctor recommends the best treatment available, but your scheme pays only for more modest treatment?
Also, consider that you may want time to recover from your illness. If you don’t have temporary loss-of-income protection, your income protection policy will pay only if your cancer leaves you permanently unable to work.