What type of se­vere ill­ness cover will suit you best?

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE -

De­bates about the mer­its of full or par­tial pay­outs on se­vere ill­ness poli­cies have been rekin­dled by the in­tro­duc­tion from next week of stan­dard dis­clo­sures about pay­outs on th­ese poli­cies. Se­vere ill­ness, dread dis­ease or crit­i­cal ill­ness cover is in­tended to cover you against the cost of sur­viv­ing a se­ri­ous ill­ness.

An in­come re­place­ment pol­icy will cover you when you are too ill to work. Your med­i­cal scheme should cover the bulk of your med­i­cal costs. Dread dis­ease cover is in­tended for the ad­di­tional costs, such as the loss of po­ten­tial in­come be­cause you may no longer be able to pur­sue your ca­reer, or the costs that arise from the need to adapt your home. Th­ese poli­cies may also com­pen­sate you for your loss of in­sur­a­bil­ity af­ter a ma­jor ill­ness.

The As­so­ci­a­tion for Sav­ings & In­vest­ment South Africa (Asisa) has set Tues­day, Septem­ber 1, as the dead­line for life as­sur­ers to dis­close on all mar­ket­ing ma­te­rial and on their web­sites the per­cent­age of the sum as­sured they will pay out for four lev­els of sever­ity of heart at­tacks, coro­nary artery by­pass grafts, can­cer and strokes. Th­ese ill­nesses ac­count for 70 to 90 per­cent of all dread dis­ease claims.

Once life as­sur­ers dis­close on a stan­dard­ised grid what they will pay out for each ill­ness at each sever­ity level, you will be bet­ter equipped to com­pare their poli­cies, Asisa says, al­though the stan­dard­ised def­i­ni­tions ap­ply only to the def­i­ni­tions of the four ma­jor ill­nesses and ig­nore other fea­tures of the poli­cies on of­fer.

But it is a mat­ter for de­bate whether you should opt for a pol­icy that pays out 100 per­cent of your sum as­sured re­gard­less of the sever­ity of the ill­ness or one that pays out at a lower level and con­tin­ues to of­fer you cover for re­lated claims.

Life as­sur­ers fall into two camps: those that pay out in full re­gard­less of how ill you are and those that of­fer what is known as tiered cover. Per­sonal Fi­nance can­vassed the views of a life as­surer from each camp.

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