You are Here > Home > My Insurance > Using critical illness insurance to supplement medical cover

Using critical illness insurance to supplement medical cover

Dec 23, 2021

Using critical illness insurance to supplement medical coverMany financial advisers are using life products to supplement medical costs. While current legislation does not allow for cover like critical illness insurance to be marketed as a product to cover medical costs, for most policyholders, that is exactly what it is used for.

The costs of getting cancer, for example, can be extensive. Critical illness cover pays out a lump sum on the diagnosis of a major disease or medical event, such as cancer or a heart attack, and some policies even cover trauma events.

Rather than taking out comprehensive medical scheme cover, some members are taking out a basic hospital plan, adding in gap cover, and then supplementing with a critical illness plan. Alternatively, they are opting for primary health care insurance combined with critical illness benefits.

While this is certainly not ideal, it is at least offering South Africans some form of protection against high medical costs given the current status quo, by allowing a mix-and-match approach.

For example, a 30-year-old could build medical cover as follows:

  • Basic hospital plan: R1400
  • Comprehensive severe illness cover of R1 million: R200
  • Gap cover R280

Or by using primary health insurance, they could opt for:

  • Sanlam primary care with accident benefit: R579
  • Comprehensive severe illness cover of R1 million: R200

The real cost of a cancer diagnosis

Liberty’s claim statistics showed that cancer remains a major cause for claims, and this has been a consistent trend over many years.

The prevalence of particular types of cancer in South African society remain evident. Death and impairment by cancer and leukemia was the top reason for claims, representing 27 percent. This was followed by cardiac and cardiovascular-related causes, comprising 20 percent of all claims. In men, cancer and leukaemia was 25 percent, and for women 31 percent of overall claims in 2020.

When Lebo’s doctors found a small mass in her chest, the initial biopsy had said it was benign. But more than a dozen hours after her “short” surgery began, she awoke in ICU and discovered she had been rushed into a major open-heart procedure.

As she recovered over the next few days, she learnt that the mass had spread across her entire chest, and that doctors were concerned that intensive growth meant she was in an advanced stage of cancer.

But even after the majority of the mass was removed in her surgery last year, further tests revealed she would need at least six months of chemotherapy to fully destroy the remaining pieces of the lump, which had been identified as Stage 4 Anaplastic T-Cell lymphoma.

She assumed her medical aid was enough to cover the treatment and that the minimal disability and basic critical illness cover would be sufficient to prevent the financial implications that came with such a serious disease.

“Sadly, this wasn’t the case. I never really thought I’d need to use the cover, at least not when I was so young. So, it was a basic plan, and even though it helped, I’m still heavily indebted,” says Lebo.

Kresantha Pillay, Head of Liberty’s Lifestyle Protector agrees, saying that many people – both young and old – have the same misconceptions.

“Unfortunately, people underestimate the true cost of cancer and purchase inadequate cover. Without the right protection, your treatment can deeply impact your financial health.”

Pillay adds that in order to reduce the financial burden on a policyholder diagnosed with a critical illness, Liberty has removed the 14-day survival period following a confirmed diagnosis of a critical illness.

When Khumalo contacted her insurer (who was also her medical aid provider) following her diagnosis, she was informed that her medical aid only provided R400 000 per year to battle cancer. But this ran out within the first few months, and even though her disability and critical illness cover was paid out to help cover the costs, she was still expected to pay 20% towards the total costs now that all her insurance and medical aid funds had run out.

She estimated that she had spent at least R250 000 out of her own pocket to cover the shortfall, sending her family into serious debt.

The strain of the surgery and subsequent treatment also meant that working was impossible, and her salary during her time off work was cut down to 75% as she recovered.

This article first appeared in City Press.

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Maya Fisher-French author of Money Questions Answered

Previous Articles

Five ways to boost your income and financial knowledge

Angelique Ruzicka shares five ideas for how you can improve your financial knowledge and possibly boost your income. Boosting your income, especially during a pandemic, can feel nigh on impossible, especially when costs are going up and you’ve been told there’s no...

Financial tools to keep you on track in 2022

Advances in technology mean that it’s now so easy to keep track of your finances and achieve savings goals, using smartphone apps, websites, and other online financial tools, says Angelique Ruzicka. If you’re still using Excel or some other rudimentary means to keep...

What will the rand do in 2022?

Ryan Booysen, MD at DG Capital Forex, stares into his crystal ball to predict where the rand will go in 2022. The rand ended 2021 on the back foot, after the Omicron announcement and subsequent global kneejerk reaction of isolation and red-listing the country. And...

SARS gets serious over non-compliance

Jashwin Baijoo, Legal Manager, Africa Tax and Compliance at Tax Consulting SA, warns all non-compliant taxpayers that SARS could be coming for them sooner rather than later. In media statements in recent months, the South African Revenue Service (SARS) has made clear...

Should I use my retirement lump sum to settle my debt?

A question that I often receive is whether it's a good idea to use one's lump sum on retirement to pay off short-term debts, such as car debt or one's credit card. For example, Ntombise recently wrote to me: “I have just retired from work and expect a lump sum...

Reflecting on the year that was

Victoria Reuvers, Managing Director at Morningstar Investment Management South Africa, looks at how financial markets performed in 2021. As a runner, the change in seasons gives me time to reflect. Autumn is my favourite season, and always reminds me that change is...

Immediate access to retirement funds unlikely

Retirement reform paper calls for comment but no move on immediate access. Retirement fund members hoping to access their retirement funds for urgent financial relief will be disappointed by the retirement reform paper issued by National Treasury last month. In the...

The 2022 survival budget

As if the last two years were not tough enough, there is no silver lining awaiting us in 2022. In 2021 we absorbed further fuel-price increases, a 15% hike in electricity costs, and an interest-rate increase of 25 basis points – and this is only the start. It is...

Savvy ways to use your bonus

Many companies are cash strapped due to the impact of Covid-19, but if you are one of the lucky few who got a bonus or windfall this year, it will be tempting to spend it to celebrate surviving another tough year. However, money experts recommend being a bit cautious,...

Options if medical schemes are unaffordable

Medical schemes remain unaffordable for many working South Africans. According to Gary Allen, chief executive at Sanlam Health, an individual should not be spending more than 10% of their income on health cover. Considering that a basic hospital plan can set you back...

Pin It on Pinterest

Share This