Why critical illness cover is essential
Guest writer Walter van der Merwe, CEO of FedGroup Life, talks about the importance of critical illness insurance and what the policy could cover you for.
You never imagine yourself to be caught on the wrong side of the statistic. The critical illness statistic that is. And if you do find yourself part of the dreaded statistic, a world of specialists, scientific terminology and medical costs stare you in the face.
You are not alone though. The chances of contracting and surviving a critical illness prior to retirement is reasonably high.
Fortunately, advances in medical care means that, now more than ever, you will survive a critical illness. The scary part is that the cost of medical treatment will put a strain on finances, especially as a critical illness often involves surgery and long term treatment. In fact, medical and other expenses associated with critical illnesses are responsible for a significant number of people becoming financially destitute.
While medical aid and gap cover products pay benefits according to specified rates, it often does not cover these costs in full. There is a limit to what these products will pay and there may still be a significant shortfall, especially in the case of a long term illness.
When preparing for the other side of the statistic, it is important to consider critical illness cover as a means to buffer expenses associated with a disease or illness. Especially the unexpected expenses that will not be covered by your medical aid, gap cover and disability income protection cover.
What your policy could pay for
If you meet the definition of disability for your critical illness cover product, the cover will provide you with an income if you are unable to work. Unlike medical aid and gap cover products that pay directly to medical providers, critical illness cover pays you an income in the form of a tax-free lump sum. There is no restriction to how you use this lump sum. The money can be used for:
1. Normal living expenses such as petrol, food, schooling, car, bond and retirement savings products.
2. Special diets or supplements sometimes used in the treatment of a critical illness such as cancer. Examples that may benefit cancer patients include co-enzyme Q10 and antioxidants.
3. Acupuncture and other traditional Chinese medicine. Breast Cancer patients often experience joint pain and stiffness from aromatase inhibitor (AI) treatment. Acupuncture can provide an improvement in the pain.
4. Experimental treatments that are not covered by medical aids. For example, a new treatment that is being tested in a clinical trial in Germany that may provide a way to stop the onslaught of multiple sclerosis without interfering with the body’s immune system.
5. Treatment for anxiety, depression and post-traumatic stress disorder. The entire family is affected by a critical illness and may need treatment in order to cope and adjust, besides the treatment for the patient suffering from the disease or illness.
Read the small print
It is important to note that the benefits from a critical illness policy are paid only if your disease or illness meets the definition in the policy exactly. Some critical illness cover policies will pay you multiple times. For example, if you are diagnosed with cancer and receive a lump sum but suffer a heart attack two years later, you will get paid again.