June 05, 2009 Edition 1

HEART attack, stroke, cancer and the need for coronary artery bypass graft surgery account for between 70 percent and 90 percent of all severe illness claims.

When you consider that 50 percent of heart attacks are mild or minor, 40 percent of strokes result in mild damage and 60 percent of cancers are stage 1, the conclusion must be that most claimants fall into the mild severity category – for which severity-based products would typically pay 25 percent or 50 percent of the cover amount. Furthermore, lifestyle adjustments that need to be made can be significant – even at lower illness severities. Again, with a 25 percent or 50 percent payout, customers may not get the financial protection they need to make these adjustments.

Critical illness solutions are designed to pay out a benefit when a policyholder has a serious illness or suffers a traumatic medical event – which results in financial difficulty. “Hence, with a 100 percent pay-out of their cover amount, customers can enjoy greater financial protection and be assured of their specific illness benefits,” according to Ursula Torr, risk solutions products manager at Old Mutual.

As modern medicine progresses, the chances are good that people suffering from the four core dread diseases will actually survive the incident and continue to live for at least five years. Hence, the greatest need for customers is not only to survive these illnesses, but also to have the financial means to provide for post-event services, such as rehabilitation and redesign of home and workplace, to say nothing of potential loss of income.

Earlier this month, Asisa (Association for Savings and Investment South Africa) announced the decision by the Financial Services Board and the Competition Commission to vet the life insurers’ standardisation of their disclosures to consumers around when critical illness products pay out, as well as specifying the level of cover.

This step has been deemed necessary to cut out widespread confusion in analysing and comparing risk protection in South Africa. In addition, Asisa has given life companies until September to adopt a set of standard medical definitions for the four core diseases.

Torr said: “Even at ‘mild’ severity levels, an illness can have a huge impact on your lifestyle. So with our Greenlight risk solution, we recognise that customers need 100 percent of their cover to pay out if they suffer from one of the four major dread diseases – no matter how mildly.

“We make no differentiation between the severity levels ranging from level D (least severe) to level A (most severe) on Asisa’s dread disease disclosure grid.”