Severe illness cover vs. cancer benefit: do you need both?

Published on 2nd February, 2023 at 10:10 am

Understanding the various risk cover options available to you given your risk can help you get cover tailored to your needs.

Reading time: 3 minutes

In this article you’ll learn:

• About the need for risk cover in the South African income-earning population.
• How severe illness cover can aid in managing the financial impact of a severe diagnosis.
• The difference between severe illness cover and a cancer benefit, and how each can be beneficial as part of a financial plan.

 
When it comes to severe illness cover, South Africans are typically underinsured. A common misperception is that a comprehensive medical aid plan would suffice in covering expenses attached to a severe illness diagnosis, but this is often not the case.

Severe illness cover has become critically important because people are living longer and the odds of being diagnosed with a severe illness are higher than ever. Historically, people died earlier from severe illnesses, but many are now able to live longer while managing or being treated for illnesses such as cancer, dementia and severe heart conditions, thanks to medical innovation.

Without severe illness cover, you run the risk of not being able to cover additional (and often unexpected) costs of being diagnosed with an illness, adding unnecessary financial and psychological stress to an already challenging period.

Severe illness cover and cancer benefits

There’s been an evolution of risk cover in recent years. Before, one could get standard critical illness cover that provided a tax-free benefit payout for cancer and other serious conditions. Now there is an option to add an additional layer of cover to suit your needs if you feel you need further or specialised protection against additional unforeseen expenses.

Sanlam’s cancer benefit is one such option. It’s become an important benefit for several reasons. “According to the National Cancer Registry, the lifetime risk of developing cancer among the South African population is one in eight for females and one in six for males,” says Petrie Marx, product actuary at Sanlam Individual Life.

These statistics are also confirmed in Sanlam’s internal claims experience. In 2021, 66% of severe illness claims paid out to women were for cancer, of which 65% were for breast cancer alone. “By comparison, 42% of severe illness claims paid out to men were for cancer, of which 25% were for prostate cancer, still a very high statistic,” adds Marx.

The advantages of a cancer benefit

The financial impact of cancer can be quite severe, even for those who survive the trauma. “A Cancer benefit, or indeed comprehensive severe illness cover, helps cover additional expenses like employing a carer, the cost of treatment not covered by medical aid or gap cover, travel and accommodation costs, the option to take a longer recuperation period, and other adjustments to your lifestyle,” points out Marx.

A cancer benefit also provides comprehensive protection. “It provides cover for cancers, leukaemia, lymphomas and tumours – even benign tumours. It also offers comprehensive cover for early (even pre-malignant) cancers. For example, early skin, prostate and female cancers,” adds Marx.

With the high prevalence of cancer, financial planners often recommend taking out cancer-only cover on top of standard severe illness cover, particularly if there is a known family history of cancer diagnoses. This will ‘double’ the protection for cancer as opposed to other conditions.

It can also be taken as an individual benefit. It’s best to speak to a qualified financial planner about your unique cover needs to understand what is best suited to your risk needs and your pocket.

When you take out a Sanlam Premier product with cancer benefit, you can earn Wealth Bonus, Sanlam Group’s monetary reward for long-term wealth. Because Premier risk products are participating Wealth Bonus products, every time you pay a premium, Sanlam contributes to your Wealth Bonus, which eventually unlocks at certain milestones and pays out in cash. Find out more here.