During tough economic times it is tempting to question the need for having life, disability, severe illness (dread disease) and short-term insurance cover. With many competing demands for our precious resources, it is often difficult to reconcile paying for something that cannot be felt, touched, or enjoyed right away. The Covid-19 pandemic has shown just how vital it is to have suitable cover in place to protect ourselves and our families from the devastating effect of such an unexpected event happening in our lives.
Every year South Africa’s more established life assurance companies publish their annual claim statistics. Old Mutual and Sanlam published their 2020 reports this month. They show that the major life assurance companies in South Africa are continuing to honour their commitments to pay all qualifying claims, despite the havoc caused by the Covid-19 pandemic.
The reports contain detailed statistics relating to the major categories, those being life, disability and severe illness cover.
The two companies confirmed that they paid 98% and 99% of all death claims respectively in 2020. Any claims not paid were due to non-disclosure, fraud or certain policy exclusions. The reports confirm that cancer and tumours, cardiovascular (heart) disorders and respiratory system disorders combined, accounted for more than 55% of all death claims. Sanlam reported that 11% of their death and funeral claims paid during 2020 were directly related to Covid-19.
When it came to paying disability claims, both companies quoted musculoskeletal disorders (bones, back, joints and connective tissue), cancer, central nervous system disorders and psychiatric disorders as being the major causes of claims. Old Mutual noted that sickness income claims were 3.5 times greater in 2020 than in 2019. The main cause of claims for this benefit was for “infectious diseases,” the category in which Covid-19 claims fell.
For severe illness claims, over 80% of the claims related to cancer and tumours, heart attack, stroke and coronary artery bypass surgery. Cancer was by far the largest single cause of claims for both men and women. Breast cancer was the single biggest severe illness claim for women and prostate cancer for men.
Sanlam reported paying 60% more for funeral claims in 2020 than in 2019. They attributed Covid-19 as being the primary reason for this increase.
Doctors often say that a healthy lifestyle, not smoking and regular exercise will increase our chances of living a long and healthy life. Unfortunately, illnesses such as heart attacks, strokes, cancer and pandemics such as Covid-19 do not discriminate and can affect anyone at any time. It is prudent to have a plan in place to smooth out the potentially devastating financial consequences associated with such an event. With appropriate cover in place, the trauma associated with coping with loss or illness is greatly reduced. Not all life, disability and severe illness plans are the same. An experienced Certified Financial Planner® will be able to assist you to identify the most suitable cover for you and your family.
Rands and Sense is a monthly column, written by Ross Marriner, a CERTIFIED FINANCIAL PLANNER® with PSG Wealth. His Financial Planning Office number is 046 622 2891
