Don’t dread how the picture can change after 65, be prepared
Ageing is enjoyable only if you are healthy. The future demands that every individual should take out sufficient health cover, exercise and follow a healthy diet, but don’t forget your medical aid, 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 US found that it is indeed the lowest worldwide – at only 49,7 years.
However, the picture changes dramatically if you manage to survive until the age of 65 in South Africa.
Sanlam’s research revealed that the life expectancy of this group has already 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 reaching 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. However, where 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.
Unfortunately, this is also the problem, as survival comes at a cost. Current developments in medicine are taking place at a pace medical aids can’t keep up with. What is clear, however, is that there is no way any one can face the future without a medical aid. 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 cover.
A medical aid will only cover medication once clear statistics regarding that medication collected over several years are available. So, when it comes to diseases involving extensive research, it may easily happen that the medical aid won't cover the cost of the latest treatments.
According to Momentum, the difference in costs charged for cancer treatment and costs covered by a medical aid 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 only including the 20 major diseases, while 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 just 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, rather make sure that the amount of cover taken out is sufficient - the choice is dependent on individual circumstances.
Some types of dread disease cover offer a reinstatement option. This means cover 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 should be for the cover to pay out, the cheaper the cover will be. However, make sure that cover is not paid out only when nothing can be done any more.