Even with the financial stresses of life already taking a toll on many South Africans, we can’t ignore that our health could take a sudden turn for the worse, landing us not only in physical, but even greater financial distress.
According to Bertie Nel, Head of Financial Planning and Advice at Momentum, the Momentum Life Insurance 2023 claims statistics paint a stark picture of the financial unpreparedness that comes with life-altering illnesses. “Most death claims were for cardiovascular and cancer-related illnesses, but more than 80% of these clients didn’t have critical illness cover in place. Without it, they were likely unprepared for the significant financial impact of their illnesses with many probably leaving their dependents facing the expenses caused by their illnesses.”
Critical illness claims are on the rise, a trend set to continue due to increased longevity and a higher prevalence of serious diseases. Despite this, many South Africans assume that their medical aid, gap cover, or disability cover will be sufficient for all health-related expenses, unaware that these may not cover essential costs.
A critical illness can strike anyone at any time, says Nel. The costs of treating illnesses such as cancer, heart attacks, or strokes, and living with the long-term consequences, extend well beyond the hospital stay to include long-term care, rehabilitation, and, in some cases, even lifestyle changes.
“Without a solid financial safety net, these costs can quickly deplete savings, erode income streams, and derail retirement plans,” warns Nel. “It’s a stark reminder that just medical scheme membership isn’t enough, you need to consider all financial risks.”
For the average South African, preparing for the financial impact of a critical illness may seem daunting. However, Nel believes good planning starts with understanding your options.
He provides three key steps to take to protect your financial future against the impact of a critical illness:
- Assess your financial situation: It’s important to understand your current financial standing, including savings, income, and insurance policies.
- Consult a financial adviser: Working with a professional can help you identify any gaps in your cover. They can help you understand the need to prepare for the unexpected and can explain the benefits of something like critical illness cover. Every individual’s situation is unique, so working with a financial adviser ensures you’re getting the cover that fits your specific needs and budget.
- Plan for the long term: Critical illness can affect both your present and future, particularly your ability to save for retirement. It is therefore crucial to look at the most comprehensive cover you can afford and have sufficient cover in place.
A critical illness diagnosis is often unexpected, but planning ahead can significantly reduce its financial impact. Beyond medical scheme membership, Nel says a financial safety net that allows one to focus on recovery rather than financial survival is crucial.
“This safety net doesn’t only consist of insurance, but also financial education and preparedness. We all have to hope for the best but prepare for the worst with a safety net that protects us and our families when the reality and consequences of a critical illness diagnosis strike.” Without this, Nel says the path to recovering from a critical illness can be overshadowed by financial stress, making it more difficult to focus on healing.
“There is no time like the present to get your finances in order. Speak to a financial adviser to ensure all eventualities are covered as part of a comprehensive financial plan,” says Nel.
