The descriptions for this type of cover differ. In the financial planning environment, it is known as Critical Illness, Severe Illness or Dread Disease. As the names so aptly describe, this unfortunate event happening in your life is critical. It is critical, severe and it is dreaded. In most cases, and in our experience, this event is life-changing. It can have a serious impact on your quality of life. And if that is not enough, there will likely be considerable expenses as a result of making the necessary lifestyle changes. Without a doubt, a critical illness or a trauma- related event would most probably have a negative impact on your financial security. And of course, anyone can suffer a critical illness. Factors such as age, gender, lifestyle and family history all contribute to our chances. And no one is excluded!
This benefit, either as an addition to a life policy or as a stand-alone policy, is designed to pay a cash lump sum. The purpose of this payment is to help fund the substantial lifestyle adjustments that may have to be made which in turn, may have significant financial implications for you and your family. With some form of dread disease benefit in place, you can protect yourself against the risk of being burdened with the cost of surviving and recuperating from a severe illness or some unexpected trauma.
Clients often confuse this benefit with disability cover and medical aid. It is quite different.
Disability is designed to pay for an event that leaves you unable to work due to injury or illness. As an example, a heart condition such as the need for bypass surgery can be successfully treated and you can resume work after a period of recovery. In this instance, because you are able to go back to work, your disability benefit will not pay out as you have not actually become disabled. Cancer is another example of an illness for which you can be treated and which may not cause you to become disabled.
Your medical aid benefits have no bearing on the lifestyle changes that you might have to make. Your medical aid is there to pay for medical expenses related to your treatment. There is no benefit for the “non-medical” expenses related to your recovery – this is where Dread Disease cover comes in.
Statistics in South Africa show that you are far more likely to contract a Dread Disease than die or become disabled. When last did you review your dread disease cover? Can you afford to be without it? Please contact one of our financial advisors for comprehensive advice about the importance of this type of cover.
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)
Senior Financial Advisor
FPM Risk & Wealth Management
011 778 9300