The fact of the matter is that none of us wants to rush out to buy medical aid, life cover, or disability and severe illness cover, but it is something we all need—especially the first two. If we were spenders, we would rather spend our money on entertainment or clothing. Or if we were inclined to save, we would rather invest in unit trusts or shares. But to rush out and buy life cover or even medical aid is not on the top of anyone’s purchase list. But the fact of the matter is —we do need it.
In South Africa we have the choice of private or public health care and, if you earn an income, you have to pay at public facilities, be it a nominal amount. Accessing private healthcare is a lot more expensive and, if you do not have medical aid, you will have to pay a deposit at private hospitals before you are admitted. The cover you choose can range from basic hospital cover, to hospital cover, plus all day-to-day medical costs covered.
It is helpful to annually review your medical aid plan to ensure you are on the correct plan for your family’s medical aid needs. Discovery Health estimates that 2% of medical inflation are due to members being on the wrong health care plan. If you are on the wrong plan you will claim more than the average member on that plan and pay a lot of medical expenses from your own pocket. All medical schemes give their members the opportunity to change their plan choice for the following year. It is a good time to review your past year’s expenses, including all out-of-hospital costs, and your expected medical costs going forward.
Why would one require life cover, many ask me. In instances of death, there are costs payable such as executor fees, funeral costs and, if your net estate is above R3.5 million, estate duty. If you have dependants you would want to leave them the same or better off than when you were alive. Many leave their dependants a lump sum to cover costs at death, cover debt, and provide an income for the family for a number of years. Life cover is relatively cheap and a worthwhile investment for your family in the event of your death.
Disability and severe illness cover is what you would claim from in the event of being unable to work (disability cover) or contracting a severe illness. If you had a mild heart attack and would be back at work within two weeks, you would claim for severe illness. If you had a severe cancer, stage 3 or 4 for example, you would claim for disability as it would affect your ability to work; for a milder cancer you might claim for severe illness as you are able to work but the illness does impact your life. Disability cover is related to a person’s ability to perform their nominated occupation and severe illness is related to contracting an illness, as defined by the rules of the life assurer.
Disability and severe illness cover is not to make people better off than before an illness or disability, but to place them in a similar position despite having a severe illness or disability. Medical expenses are covered by the relevant medical scheme and the lump sum for the disability or severe illness claim is used to assist financially. It can be used to settle debt like a home loan, car repayments or business debt. It can also be used to provide an income until the person is able to return to work, or to assist in rehabilitation. The list is endless and the cover is used to provide a financial buffer.
Ideally one should purchase risk cover—medical aid, life cover, and disability and severe illness cover—when one is young. The premiums are lower the younger you are and, if you are healthy, there is less chance of having loadings or exclusions imposed.
My advice would be to get the cover sooner rather than later and have peace of mind.
If you have any questions regarding the above or would like some assistance in choosing the right plan for you, you may book a consultation here
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