By Ross Marriner
Last week, we assisted yet another client to submit a dread disease (otherwise known as critical or
severe illness) claim, reinforcing just how important it is to have this form of cover as part of your
financial plan. It is sobering to note just how many clients have submitted claims for this benefit in
recent months.
Dread disease cover is designed to pay you a tax-free cash lump sum if you are diagnosed with a
critical illness. This pay-out can be used to cover out-of-pocket medical expenses such as medical
appliances, home adaptations, travel costs, private nursing and other expenses not normally covered
by a medical aid. You may wish to use the money to cover living expenses while you are being
treated or recovering from your illness. You may decide to scale down on your work activities, take
more holidays or even invest the proceeds.
Although most claims relate to cancer, stroke, heart-attack and coronary artery bypass-related
diseases, there are a great many other conditions covered by most life assurance companies under
the dread disease or critical illness benefit.
A recent study by Statistics South Africa showed that cancer-related deaths rose by more than 29%
over the period from 2008 to 2019 and this disease now accounts for the highest number of dread
disease pay-outs. According to Liberty, cancer now accounts for 24.3% of claims, with cardiovascular
conditions a close second at 20%. The five most invasive cancers experienced by South African
males are prostate, colorectal, melanoma, non-Hodgkin’s lymphoma and lung cancer where in
females, breast, cervix, uterus, melanoma and colorectal cancer are the most prevalent.
What is concerning is that life assurance companies are receiving an increasing number of claims
from younger policyholders. Liberty reported that, while cancer impacts people of all ages, it affects
16% of millennials and 21% of young parents. Sanlam reported that in 2023, two thirds of sickness-
and-disability income claims came from policyholders who were younger than 45. Old Mutual
revealed that several males and females under the age of 30 had submitted claims due to bypass
grafts and multiple sclerosis.
The younger you are when you apply for cover, the more affordable your premiums are likely to be.
This means that if you are relatively young and in good health, you are likely to qualify for dread
disease cover at a relatively low cost and with favourable underwriting conditions.
Although doctors recommend living a healthy lifestyle with a good diet, exercising regularly and not
smoking to reduce the likelihood of your contracting a disease, this is sometimes not enough. A
dread disease diagnosis is a life-changing occurrence and it makes sense to have a plan in place to
smooth out the potentially devastating financial consequences associated with such an event. An
experienced Certified Financial Planner® will be able to advise you how dread disease cover can
assist to protect your financial wellbeing, whist you take care of own your physical and emotional
wellbeing.
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
