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Here’s what you need to know about the difference between dread disease cover and life cover

20 March 2020 – Dread disease cover has conventionally always been included as an add-on for life cover options, but lately we see the market moving away from this model.

Life cover is a type of insurance policy that pays out a death benefit if the insured individual passes away, while dread disease cover is an insurance benefit that normally offers a lump sum, tax-free payment if you are diagnosed with a dread disease.

Felix Kagura, Head of Long-term Insurance Propositions at Standard Bank Group says that, the cost of not being insured far outweighs the short-term ache of making a small additional payment every month. The reality is that insurance delivers the necessary protection when the unexpected arises.

Dread diseases do not discriminate and can affect anyone, however factors such as family history, gender, lifestyle and age can also contribute to your risk. A dread disease diagnosis is a life-changing event and can have a serious impact on your quality of life.

“Considering what your finances could look like if you were to be diagnosed with a dread disease is a good starting point to help you establish how much cover you may need and, in the event of a diagnosis, will help you and your family not to worry about money, but rather your recovery” says Kagura.

Dread disease cover offers financial protection against illnesses such as: heart attacks, cancer, stroke, Alzheimer’s and Parkinson’s disease. It also covers injuries from accidents such as paraplegia, major burns, and brain damage.

South Africans may be living longer — but they’re getting sicker and spending more years in poor health. They tend not to be properly insured for these rising health risks: life cover, which pays out only on death, remains the dominant long-term insurance product, meaning most South Africans are only covered for permanent risks, leaving them dangerously exposed to the risk of a temporary injury or illness.

Should the time come, and you are incapacitated and/or unable to speak for yourself, there are a number of tools available to make things easier for your loved ones:

  • Insurance cover

If you have disability or dread disease cover in place at the time of diagnosis, there may be potential for you to claim from your insurer. Depending on your insurer, you may have a dread disease and/or disability claim on initial diagnosis, followed by further claims in the event that the illness progresses.

  • Early retirement

Depending on the severity of your illness, you may be able to retire early as a result of your ill-health. If you become severely incapacitated, the trustees of your retirement fund may decide to allow you to take early ill-health retirement. This means that you would be able to access your retirement funds before the legislated retirement age of 55.

“As you move through the various life stages, your need for life, disability and dread disease cover will change. The right advisor can help you formulate the right mix of life, capital disability, income protection and dread disease cover for your circumstances, and will review this cover at least annually to ensure that you are neither over- nor under-insured at any point in time,” concludes Kagura.