How critical is the impact of critical illness cover?

Feel free to reach out to PSG Wealth Manager Saretha Fouche  directly.

Yet, when it comes to critical illness cover, the general response is: “No, that benefit is too expensive...you will just have to see what the client can afford.”

There is nothing wrong with that statement, because critical illness cover can be costly and determining the right level of critical illness cover involves a degree of uncertainty. We cannot predict whether a claim will arise, the type of illness it may involve, or the financial impact it may have on the client, among other considerations. So, when setting the level of cover, we strive to strike a balance between affordability and providing sufficient protection against the unknown.

First and foremost, we take out this type of cover in case something happens. If nothing happens, you paid for peace of mind. But if something does happen, it can have a profound emotional impact. Still, we don’t buy insurance to cover sadness, we buy it because the financial implications in this case are so unpredictable.

A few years ago, my husband was diagnosed with a benign brain tumour. He underwent open brain surgery and, as a result, received a 100% payout. He didn’t receive the payout because of the tumour itself, but because the policy paid out based on the type of procedure performed. Naturally, it was a difficult and emotional time for us, but financially, we were not impacted at all. Our medical aid covered all costs, and we didn’t even have time to claim from his income protection, as apart from the stitches in his head, he was back to full health within three weeks.

I have dealt with many claims, from breast cancer to prostate cancer to heart attacks, etc., all of which had an emotional impact that far outweighed the financial impact, due to the fact that these clients had critical illness cover. These days, we hear about new types of treatments, such as hormone therapy and immunotherapy, as well as medical devices and technological advancements for arthritis, heart conditions, and more. Sadly, many of these costs are only partially covered by medical aid, in some cases, not even at all, or they are only available on top-tier plans. And just like that, the financial impact becomes just as significant as the emotional impact.

So, all things considered, is the old “rule of thumb” cover amount of R750 000 – R1 000 000 still enough? Definitely not, if we look at current and projected costs. I still cannot provide a magic formula, but I do know that it’s not worth being without critical illness cover. You need to ask yourself how much of such an impact your assets can absorb. At the end of the day, the privilege of being able to focus solely on recovery during such an emotionally overwhelming time is absolutely priceless.