Make sure your employees are covered against critical illness
Tailored group cover offers remedy against increasing prevalence of cancer and cardiovascular illnesses
Statistically, one in four South Africans will be affected by cancer or will have someone close to them diagnosed. For a company of 100 employees, that’s 25 valued employees who could face such trauma. Apart from the financial burden of dealing with a critical illness like cancer – the out-of-pocket medical costs, unforeseen non-medical expenses like in-home carers and additional childcare – can wreak havoc on an employee and their loved ones. For an employer this means possible loss of productivity, absenteeism and the potential loss of a valued employee.
According to Michele Jennings, CEO of Sanlam Group Risk Benefits, “Our statistics show a sharp rise in claims ratios related to cancer and other stress related cardiovascular illnesses such a heart-attacks and strokes.”
Jennings believes companies can do more to assist their employees to cope with the burden of critical illness, especially at a time when medical aid and gap cover benefits can fall short of covering the actual, and unexpected expenses incurred in such circumstances.
The new Impact Range of Severe Illness benefits recently launched by Sanlam Group Risk offers a Cancer-only option, which covers 50 cancer related claim events, a Cardiovascular-only option, which covers 45 cardiovascular claim events and a full Comprehensive Severe Illness option which covers the same claim events as the Cancer-only and Cardiovascular-only benefits combined, together with more than 100 additional claim events covering various serious as well as other milder conditions.
The Impact range is an affordable range of Severe Illness benefits designed to consider the true impact of an illness on the employee’s life and finances. This approach is superior to the other tiered benefit products available in the group market, which generally pay a percentage of the benefit according to the severity level of the illness, e.g. 25% for the lowest severity. Take cancer for example, at Sanlam we recognise that not all cancers are the same. While it would generally be suitable to pay 25% for a stage I cancer (lowest severity), paying 25% for stage I pancreatic cancer will fall short of taking the true impact of the illness on the insured member into account. Pancreatic cancer, like other aggressive cancers, has a poor prognosis, resulting in aggressive, upfront treatment, with the resultant immediate change in lifestyle. The cancer cover provided by our Impact range will therefore pay 100% for 12 specified aggressive cancers from stage I, i.e. 100% lump sum benefit from the lowest severity level.
Jennings says these impact-based Severe Illness products are the first of its kind in South Africa and can greatly assist in bridging the gap between what is covered by medical aids and the all too often substantial shortfall in medical and related expenses during or post such traumatic events.
“Severe illness cover can offer massive financial relief as it pays out an impact-based lump sum to cover unexpected expenses,” says Jennings.
Jennings says that companies should consider providing their staff with group cover for severe illnesses, as it offers cost effective benefits that take the true impact of a severe illness into account on employees that might not normally have access to this type of benefit, while providing a basic level of cover without the need for any medical proof (i.e. a medical proof free limit applies). Furthermore, group cover offers economies of scale in terms of the cost of premiums with the added benefit of peace of mind for employees and the overall corporate wellness of the business.
However, Jennings cautions employers to choose the type of cover carefully with the assistance of their Group Risk intermediary due to the sheer number of illnesses that make-up various risk cover options.
“Around 85% of all critical illness claims are as a result of just four medical conditions, all covered within the Cancer-only and Cardiovascular-only options. The four steps below offer a guideline for employers and intermediaries when contemplating or comparing these types of group risk products.
Element 1. The incidence, or likelihood of getting the illness or condition
This is probably the most important consideration. How likely is it for an employee or employees within the organisation to actually get a certain condition? Around 85% of all critical illness claims are for just four medical conditions: heart attack, cancer, stroke and coronary artery bypass surgery. Some products cover a very long list of conditions, while others have a shorter list, which can make them look like less comprehensive products. A product with a long list of claim events is not necessarily a better product if these four diseases are not comprehensively covered.
Element 2. The definition of the claim event or illness for which an employee can claim
Claim events refers broadly to the medical conditions that are covered such as a heart attack, cancer, stroke or Alzheimer’s. But looks can be deceiving and that is why it is important to keep in mind that critical illness 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. Under the guidance of a qualified broker, it’s important for the employer to understand the definition of each claim event in order to determine the most appropriate benefit available to his or her employees.
Digging a little deeper, it is vital to review the benefit pay-out at claim stage, 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 cover for a defined heart attack, while another will pay out 100%. Or, one product will pay 25% for a stage I 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.
Element 3. Product design
In addition to the claim event definitions, the following products features should also be considered, namely:
Survival period: This period starts from the date on the contractual claim event definition was met. Should the employee die before the end of the survival period, no severe illness benefit will be paid.
Accelerated vs. stand-alone benefits: Some critical illness products are offered on an accelerated basis, which means that if a critical illness claim is admitted, the employee’s life cover will automatically be reduced by the amount of the critical illness claim. For stand-alone benefits, on the other hand, the admittance of a critical illness claim does not have any effect on the employee’s life cover.
Multiple claims: Does the products allow the employees to claim more than once for related illnesses? Is there a limit on the number of claims for unrelated illnesses?
Jennings states that Sanlam’s innovative new Impact range of Severe Illness products are designed to accommodate tailored solutions. “Knowing that statistically, certain illnesses are far more common, our Severe Illness products allow employers to select the diseases they want covered.”
Jennings believes that offering employees additional impact-based severe illness cover under a group scheme, apart from being cost effective, has many advantages as an employee value-add and brings both the employer and the employee the security of knowing that they are financially covered when it comes to the rising risks of critical illness related diseases.