How to compare cancer benefits
Many headlines have covered the huge cost of cancer treatments in South Africa. ‘Hidden costs’ can add up as well – for example, costs associated with lifestyle changes, employing a carer for you and your children and transport to treatment centres.
That’s where a cancer benefit can play a big role in helping to ease financial distress. It is important to choose the right benefit for you. Comparing ‘apples with apples’ isn’t always easy, so consulting a trusted financial planner is the best starting point.
Nonkululeko Zungu, Product Support Consultant for Sanlam Individual Life, explains that cancer benefits cover different types of cancers. The types of cancers covered differ between insurers. Also, different benefits may pay out different percentages of the cover amount depending on the severity (stage) of the cancer. Hence, you need to consider the types of cancers covered as well as the percentage of the cover amount paid for the various severity levels.
There’s no one-size-fits-all answer. It depends on you, your budget, your family history with cancer and other factors. The ideal is to find a benefit that meets your needs and gives you value for money.
Zungu outlines a few considerations when doing the comparison.
Consider How Well the Conditions Are Covered
One means of comparison is to compare the percentage of the cover amount paid for different severity levels of cancer. Insurers disclose their payout percentages under the ASISA SCIDEP* disclosure grid for cancers covered by the SCIDEP definitions.
The better benefits tailor the percentage payout not only to the severity (stage) of the cancer, but also its likely impact on a person’s lifestyle. For example, Sanlam’s Cancer Benefit pays 100% for certain aggressive cancers in their early stages, even if the more affordable benefit option is selected. For other insurers, selecting a more affordable option usually results in smaller payouts for lesser severity cancers – even for aggressive cancers like liver cancer where the prognosis is typically poor and the impact on the lifestyle is severe.
To avoid having very long lists of specific types of cancers that are covered, while still giving the client peace of mind, some insurers include a catch-all claim event. When a cancer benefit provides cover for a catch-all claim event, cover is typically extended to cancers that may not be specifically listed as a claim event but are severe enough to affect your quality of life. The guidelines used to determine the level of severity when assessing a claim under the catch-all claim event will be disclosed in the policy documents.
The more comprehensive benefits include cover for additional cancer events that are not included in the SCIDEP cancer definitions. Examples include those that offer cover for certain early cancers. Your intermediary can help you dive deeper into comparing other non-SCIDEP cancer events, as these can get technical.
Look at Prices
When comparing benefits, consider what you’ll pay as an initial premium, and what the premiums may be later. Lower initial premiums may come with higher premium increases later. Also factor in whether the premiums or any compulsory annual premium increases will remain the same and for how long these will remain unchanged. If you qualify for a discount from the insurer, will you continue to have that discount should your circumstances change (for example, if you stop going to the gym or cancel some of your other policies with the same insurer)? If not, by how much will the premium increase?
- Level of underwriting: The level of underwriting (health questionnaires, blood and other tests) done impacts the premium. Often, the more underwriting required, the lower the premium.
- Exclusions – There may be certain conditions or circumstances under which the benefit will not pay out. These can be general exclusions (applicable to the specific cancer benefit), as well as specific to you and your medical history.
- Any waiting periods. For example, you may need to wait for a certain period, after taking out the benefit, before you can qualify to claim under the benefit.
The Four Questions to Ask before Committing to a Benefit
Ask a qualified and accredited intermediary:
- How much cancer cover do I need? This will be based on whether you have existing cover, what you can afford, and so on.
- Do I need to let the insurer know when my circumstances or lifestyle changes after the cover has started? If so, how will it affect my cover and premium?
- How long do I want to be covered for? Whole life options are more expensive but will ensure you have cover in place when you may need it the most.
- What’s the reputation of the insurer? You can refer to the published reports by the Ombudsman for Long-term Insurance to get an idea of how the various insurers compare in terms of complaints received, specifically looking at the proportion of complaints resolved in favour of complainants.