The importance of an adviser when choosing medical cover
Many consumers often question the role of financial advisers, considering the wealth of information that’s available online, and the ease of directly purchasing policies and other financial products.
However, the role of a financial adviser is as important today as it has ever been.
From a medical cover perspective, financial advisers help you to consider the right products to fit with your unique needs and to complement your broader financial management and risk mitigation strategies.
We all have unique situations, and unique health risks and concerns, so having somebody who is objective and familiar with your life history gives you a greater chance of choosing a medical scheme option and a gap cover policy suited to your needs.
There are numerous different medical cover options, all positioned slightly differently, all emphasising different benefits.
In addition, as your family’s financial and health position changes over time, your policy choices will also need to change. Therefore, having regular meetings with your financial adviser is critical. Remember that, over time, the structure and pricing of policies also change – with new benefits, new limitations, and changing rules.
The broader regulatory environment is also subjecting the industry to change. Last year, National Treasury announced long-awaited reforms to medical insurance industry, with its so-called “demarcation regulations”.
The demarcation regulations established a clear differentiation between medical schemes and other medical insurance products, which include top-up cover such as gap cover, dread disease cover, medical travel insurance and hospital cash plans.
Financial advisers should be aware of the changes to individual products as well as to the broader environment in selecting the best possible solution for you.
Some consumers question the need for gap cover.
Gap cover policies have come to the fore in many financial adviser-client conversations in recent years – driven by a few factors. Perhaps the biggest reason for gap cover’s surge in popularity has been the increasing limitations imposed by medical schemes.
Some years ago, healthcare professionals and facilities would charge according to the National Health reference price-list. Since this has changed, we’ve seen the prices charged by many specialists becoming increasingly detached from these original base levels.
Today, it’s not uncommon to see specialists charging three, four, or even five times the stipulated rate that medical schemes are willing to cover. This runaway inflation has been driven by massive changes in the industry – rising input costs, indemnity costs, and severe skills shortages.
All this leaves us in the place we’re at today: where gap cover has emerged as a way to protect consumers against shocks such as huge co-payments, sub-limits and other shortfalls not covered by your medical scheme.
In fact, 75% of the claims we process at Turnberry are for medical shortfalls from providers who are charging above medical scheme rates.
It’s for this reason that gap cover is generally advised by financial planners as an important tool in one’s broader wealth building strategy. This is particularly important when we consider that out-of-pocket medical expenses can cause a huge dent in one’s savings and potentially place families at huge financial risk.
Rather than “going it alone”, the smart option is to use a financial adviser to manage relationships with your medical scheme and gap cover provider, as well as investment houses and other financial services firms. In this way, you’ll help to ensure your array of financial and health products are aligned with your unique needs.
Tony Singleton is the chief executive of Turnberry Risk Management Solutions.