Is critical illness becoming the more important cover?

Critical illnessThis week I was chatting to my independent financial adviser who told me that the majority of the claims he handles these days relate to critical illness. He says the claims for serious illnesses like cancer and heart attacks have escalated among his clients in their 40s and 50s. These are scary stats, and this increasing trend is confirmed by the Liberty claim statistics, which are released annually.

Based on his own experience as well as industry statistics, my adviser believes that one is far more likely to claim on one’s critical illness cover than income protection or disability cover, and in his view most people need to re-adjust their cover accordingly.

For someone like me, who is self employed, income protection is vital, but my adviser argued that critical illness cover is as important ‒ if not more so.  If I became ill and needed treatment, I might still be able to work under the conditions stipulated in my income protection policy, but my productivity would be significantly reduced. I might be too tired to work a full day and have to reduce my output, or perhaps travelling for work would become impossible.

As my income protection only kicks in once I am unable to work for more than a month, I could find a constant income gap. My adviser had a self-employed client who had this exact experience. After being diagnosed with cancer, the client needed to take two weeks off work every second month, but that was not sufficient to invoke the income protection cover.

My adviser’s two preferred insurers for critical illness cover are BrightRock and Discovery – both for the extended coverage and claims experience, however, in his view BrightRock’s new Trauma IQ cover places it ahead of Discovery. BrightRock is the only insurer that has extended its critical illness cover to include trauma – for example a car accident. In the case of a severe trauma, where extended hospitalisation or ongoing treatment such as skin grafts and physiotherapy may be required, the critical illness cover will kick in. This makes complete sense when you consider that claim statistics show that car accidents and non-illness related events are among the top five reasons for death and disability claims.

Whether I am being treated for cancer or a motor accident, the same issues apply. I may need time off work for rehabilitation and possibly further operations, and I may need home assistance or a driving service if I am immobile for any period of time. Needless to say I have made a few adjustments to my policy. As my husband is an avid mountain biker I have insisted he adjusts his cover as well! I hope we never need it, but at least it is there if we do.

Note: Just as I posted this article BrightRock announced that Sanlam is buying a 53% stake in the business. I will be following up with an interview with both companies but have been assured that Sanlam will in no way affect the BrightRock cover or claims process.