If you've been shopping for life insurance, you might have come across the term critical illness cover. Sometimes this is an add on to traditional life cover, sometimes it's a stand alone policy. However, what's important is that you have the information you need to decide whether or not critical illness cover is something that you need. Of course, you're going to be paying for this with monthly premiums, or a more expensive life insurance premium, so you want to know that you're money is well spent. So we're taking a look at all you need to know about critical illness cover!
What is Critical Illness Cover?
Let's start with the basics. Critical illness cover is an insurance product that insures you against getting a critical disease. If you have this kind of policy or add on to your regular life insurance policy, and you contract a critical illness, then you can expect a pay out. Usually that pay out is in a lump sum, though sometimes it's paid in instalments. Sometimes critical illness cover will also cover some kinds of medical procedures, such as a heart bypass operation, for example. All of this depends on which of South Africa's many insurance companies you buy your policy from.
Why Would I Want Critical Illness Cover?
In simple terms you might want critical illness cover in order to have money should you become very sick. This pay out can be used to pay medical bills that your health insurance might not cover, to pay for “extras” such as a single hospital room, or to pay other expenses to help support your family. Your partner may have to take time off work, for example, or maybe there are petrol bills to pay due to a long commute to the hospital. Having extra cash in times of crisis is always a good thing.
If you're considering getting critical illness cover then there are some things that you might want to consider. Here are your main considerations:
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Can You Afford It? You will pay monthly premiums that you will need to budget for when shopping for critical illness insurance. Typically, you will add money to your life insurance premium that will let the same company cover critical illness insurance too. It's up to you to decide whether or not you can afford this;
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Are You At Risk? Do you have a family history of critical illnesses, such as cancer, strokes, or heart attacks? Do you have other risk factors, such as smoking, or being overweight? The higher your risk is, the more likely you are to want critical illness insurance. But remember, just like with any other kind of policy, your monthly premiums will go up if you fall into a high risk group;
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Are You Already Covered? In some cases you might not need critical illness cover simply because you're already covered. Many life insurance policies offer a terminal illness benefit that pays out if a terminal disease is diagnosed. Maybe you have excellent health insurance, and don't think you'll need anything more. Possibly you already have income protection insurance, so your finances are guaranteed should you fall ill. Again, it's up to you to weigh the pros and cons and decide if critical illness cover is worth it.
What Does Critical Illness Cover?
Which illnesses critical illness cover covers varies a lot, depending on which insurer you choose. In general, you can expect to have coverage for strokes, certain kinds of cancer, and heart problems. In some cases, insurers will offer different kinds of critical illness cover, with more expensive plans covering more diseases. Sometimes an insurer will sell you stand alone critical illness cover, but more likely you'll be offered it as an add on to a life insurance policy. Just as an example, let's take a look at what you can expect from some of the major insurance companies:
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Standard Bank offers severe illness cover for cancer, strokes, heart attacks, and open heart surgery, their policy is stand alone (you don't need to buy life insurance too), and offers coverage from R100,000 up to R2 million;
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Momentum claim to offer the most complete critical illness cover on the market, and whilst their website doesn't offer a complete list, they do promise to cover any critical illness that's covered by any other insurer in South Africa. Cover is stand alone, though they do offer discounts to life policy holders;
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Hollard Insurance offers a stand alone critical illness cover policy that covers 57 different illnesses and offers coverage of up to R7.5 million;
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Alexander Forbes Insurance also has a stand alone critical illness cover policy, and whilst they do have a list of diseases that they cover, they also claim that if an illness results in your loss of independence then they will pay out even if that disease is not included in their list, they do pay out in percentages, however (see below for more info).
Most major insurance companies in South Africa offer some form of critical illness cover, so these four are just an example to give you an idea of what you can expect to see when shopping.
Compare Critical Illness Insurance: Your Concerns
If you're comparing critical illness cover policies with different insurers, there are a few things that you should be on the look out for. Being aware of how policies can differ will make you better able to compare policies and quotes. So what should you be on the look out for?
Firstly, look out for “survival period” clauses. Many insurers require that the patient survive for a certain number of days AFTER diagnosis before they pay out. This means that if you have a heart attack, for example, and your policy has an eight day survival period, you must survive for eight days before the policy pays out. Obviously, shorter survival periods are better, just in case the worst happens, however around fourteen days is common with most insurance companies.
Secondly, be aware that some insurance companies pay out in percentages, meaning that you don't necessarily get 100% of your coverage paid out. Sometimes different diseases get different amounts that are paid out, other times you get a percentage at diagnosis, then follow up payments at different times. A policy may pay out different percentages depending on how much a disease impacts your life (can you work? can you dress yourself?). You'll need to read the policy information carefully to find out exactly how a pay out is made.
Finally, look out for multiple policy discounts. Many insurers offer discounted prices on premiums if you have more than one policy. Even if a company offers a stand alone critical illness cover policy, if you can combine that with a life insurance policy, you're likely to save yourself valuable Rands.
Critical Illness Cover: The Bottom Line
Depending on your circumstances, critical illness cover may or may not be a necessity. You'll need to consider all the above factors when coming to a decision, and then compare policies to find which offers the best coverage at the best price. However, critical illness cover does offer you peace of mind that should something happen and you fall ill, then you and your family will be more financially secure, and that could mean that your policy is more than worth the price.
* Disclaimer: We do not represent any of the companies, products and/or services reviewed, published or advertised on this website. Nor are we financial, health or insurance professionals or services provider. If you request a quote or purchase a product/service, it will not necessarily be given by the company reviewed on any specific page. Any decisions you make based on the information presented is at your own discretion and we advise that before doing so, you consult with the relevant professional.
Main subject: Critical Illness Cover
