In order to understand how to insure you and your family against the cost of cancer it is important to know about and understand the different types of insurance products and policies available to you. The principle of insurance, any form of insurance, is that you purchase a policy for which you pay a monthly premium and in return you will receive a sum of money or payment of your relevant expenses should the situation you insured yourself against happen.
In healthcare there are a number of different types of illnesses or events you can insure yourself against. As the cost of living steadily rises we are faced with the fact that if you or a family member should become ill there will be large financial implications for the entire family.
It is very important to take into account that each type of insurance policy and its benefits differ from insurance company to insurance company. It is vital that any person seeking insurance make enquiries and check carefully what companies offer against your own particular circumstances and requirements.
To begin the discussion with a financial adviser or broker, you will need an overview of the various types of insurance available to you.
- Medical aid cover A medical scheme is fundamentally a “medical insurance” package. Each member of the scheme contributes money, on a scheduled payment plan, into what we might call a “pool”. When any contributing member of that pool needs medical or dental care, the money needed to pay for those services is drawn from that pool in accordance with the schemes rules and benefit structure. Medical aid cover aims to “indemnify” the client against medical expenses ¬– that means the pay-outs usually go straight to the healthcare provider and won’t exceed this expense, (although there may be a shortfall) the aim is to meet the expenses as closely as possible.
- Life cover Life insurance or life cover is a way of ensuring that your family or dependants are financially secure after your death. The policy will normally pay a specified lump sum or recurring benefit to the nominated beneficiary when you die. Unlike indemnity cover, this offers a stated benefit – this means a specified amount is paid out. In some cases, should the policy allow for it, should the person whose life is insured be diagnosed with a terminal disease the policy will pay out an amount prior to the member’s death instead of when the policy holder dies. Life cover can also be known as death cover, life assurance, life insurance, term life insurance.
- Critical illness Critical illness insurance (also known as severe illness/ dread disease cover) helps the policyholder/ insured person cover the additional costs associated with life-altering illnesses and injuries. If you become sick with an illness or injury covered by your policy and survive the waiting period (applicable with some companies), you receive a lump sum cash payment. Most policies don’t dictate how you spend this lump sum payment as it is a stated benefit, not indemnity cover. Not all policies cover all critical conditions but industry guidelines say that to call itself critical illness insurance, a policy must offer cover for, at least advanced stage cancer, severe heart attacks and strokes that result in permanent symptoms.
- Disability Disability insurance covers a portion or all, depending on the insurance policy, of your salary if you are unable to work due to an illness or injury. Disability cover can also include a lump sum pay-out, typically used to settle debt after a disabling illness or injury but this lump sum may be bought to replace future salaries on becoming disabled. Some companies offer disability insurance as part of the employee benefits to certain employees, in either long term or short term benefit, depending on the nature of the employee’s illness. Individuals are also able to purchase individual disability insurance products, often called capital disability, income replacement or income protection policies.
- Gap cover Gap cover is designed to cover medical scheme shortfalls for medication or procedures you may need during your treatment. It can also be used to cover co-payments your medical aid scheme may apply to the funding of your treatment.
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