CAPE TOWN - Ageing is enjoyable only if you are healthy. The future demands that you take out sufficient health cover, exercise and follow a healthy diet, but don’t forget your medical scheme, gap cover and dread disease cover.
According to several international institutions, the life expectancy of South Africans is among the lowest in the world. In fact, the National Institute on Aging in the United States found that it is indeed the lowest worldwide – at only 49.7 years.
However, the picture changes dramatically if you live to the age of 65 in South Africa. Sanlam’s research found that the life expectancy of these people has almost reached 90. Of course, this has a major impact on retirement planning, as well as insurance.
Momentum’s data showed that 50% of people in South Africa who reach the age of 80 are diagnosed with cancer in the course of their lives. The chances of having a heart attack or stroke before this age are also much higher than most of us would expect. Whereas dread diseases used to be a death sentence a few years ago, today more and more people are surviving them – thanks to early diagnoses and the advancement of medicine.
But this is also a problem, because survival comes at a cost. Medical schemes cannot keep up with the pace of developments in medicine. What is clear, however, is that you cannot face the future without a medical scheme. Your most important asset is your health. The better your health, the bigger your income-earning potential. In order to protect this, you need medical scheme cover.
A medical scheme will cover medication only once clear statistics regarding that medication collected over several years are available. So, when it comes to diseases involving extensive research, it may be that the medical scheme won't cover the cost of the latest treatments.
According to Momentum, the difference in costs charged for cancer treatment and the costs covered by a medical scheme may easily amount to R1 million. This is enough to ruin most financial plans. Gap cover may compensate for some of the shortfalls but will also fall short when it comes to these treatments. This is where dread disease cover plays an important role. This cover pays a predetermined amount on diagnosis of a dread disease. As with any other insurance, not all types of dread disease cover are the same.
Standalone versus accelerator options
With standalone dread disease cover, your life cover is not reduced after a claim for a heart attack. However, life cover is reduced with the accelerator option, so it is cheaper. As the money paid out to you will be used for new expenses you wouldn't have had otherwise, standalone dread disease cover is the preferable option.
Limited versus comprehensive cover
Some insurers offer cover for only the 20 major diseases, whereas other insurers include more than 400 conditions in their cover. As a matter of interest, insurance for the 20 major diseases covers more than 94% of all claims, which means you might pay twice as much to obtain 6% additional cover. In the case of a family history of a condition not falling under the 20 major diseases, more comprehensive cover would be a better option. Alternatively, make sure that the amount of cover taken out is sufficient.
Some types of dread disease cover offer a reinstatement option. This means you will be paid out again if you suffer a second dread disease that is not a result of the first disease. This benefit may become invaluable.
All dread diseases have levels of severity. The more severe the illness has to be before the cover will pay out, the cheaper the cover will be. However, make sure that cover is not paid out only once nothing can be done to treat the condition.
Advocate Ronald King is the head of public policy and regulatory affairs at PSG.
- PERSONAL FINANCE ONLINE