Michelle Bester Why income protection 23Feb2024

The importance of having severe illness cover

Being diagnosed with a Severe Illness can have a profound impact on society, affecting the health, well-being, and productivity of individuals, families, and communities.


By Michelle Bester CFP®


What is a Severe Illness?

Severe illness is a term that refers to a serious or life-threatening condition that requires medical attention and may have long-term consequences. Severe illness can affect anyone, regardless of age, gender, or health status. Some examples of severe illnesses are cancer, heart attack, stroke, kidney failure, and motor neuron disease.

It is therefore essential to have comprehensive Severe Illness cover in place which will provide financial aid in the event of being diagnosed with any of these unforeseen life-threatening conditions.

Severe Illness Cover in South Africa:

Severe illness cover is a type of insurance regulated by the Long-term Insurance Act (No. 52 of 1998). It is also known as critical illness cover, living health insurance, or dread disease cover, and plays a crucial role in safeguarding your financial well-being during medical emergencies.

Severe illness cover provides a lump-sum payment to the insured upon the diagnosis of a severe illness.

Originally introduced in South Africa in 1983, it addressed the growing need as medical advancements allowed more people to survive and live with illnesses like cancer, stroke, and heart attacks.

Over time, insurers expanded coverage to include various other conditions, adapting to the changing health landscapes.

Reputable insurers typically cover 4 common severe illnesses such as cancer, heart attack, stroke, and coronary heart bypass graft. These conditions account for approximately 80% of all dread disease claims.

Additional covered diseases may include kidney failure, aplastic anaemia, muscular dystrophy, motor neuron disease, Alzheimer’s disease, Parkinson’s disease, dementia, and infective meningitis.

Always review the specific list of conditions provided by your insurer before applying for cover.

In South Africa, Severe Illness benefits are regulated by the Association for Savings and Investments South Africa (ASISA) according to the SCIDEP (Standardised Critical Illness Definitions Project) criteria.

Although the sixteen definitions (four diseases with four severities) are standardised, the percentage benefit paid for each of the definitions is up to the discretion of each insurance company. Therefore an insurer can pay between 0% and 100% for each severity of each disease.

Examples of possible pay-outs for the 4 common severe illnesses such as cancer, heart attack, stroke, and coronary heart bypass graft, could be:

From the above it is evident that all insurers are not equal when it comes to paying out claims for severe illness. It may make sense to pay a little more for the peace of mind of knowing a claim will be settled.

Determining the needed level of Severe Illness Cover:

There’s no exact science for determining the necessary level of cover.

The following factors should be considered when determining the amount of cover needed:

    • Medical Aid Coverage: Assess your existing medical aid coverage.

    • Gap Cover: Evaluate the comprehensiveness of your gap cover.

    • Income Protector: Check if you have income protection in place.

    • Lump-Sum Disability: Consider any existing lump-sum disability cover.

    • Family history: Have family members suffered from a critical illness?

These benefits should work together to reduce your financial risk in case of severe illness.

At Ascor® we can help you identify what risks you need to cover to address an unplanned crisis.  As we are independent, we can source any product from the various insurers for the cover that addresses your specific need.


Read more about Ascor® Financial Planning Services

Ascor® Independent Wealth Managers Financial Planning Services page


Related Topics








Please follow and like us: