Anyone who has ever read a policy document for dread disease (critical illness) cover will know that unless you have a medical degree it is all gobbledegook.
This makes it extremely difficult for consumers, first, to understand what they are covered for and, second, to compare products between insurers.
As a result, dread disease cover has had a fair amount of bad press with about 20% of claims being dismissed. Even intermediaries find it difficult to explain what a policy covers and when their clients will be paid out.
But from September insurers that are members of the Association for Savings and Investments South Africa will publish information grids. This should make it easier to understand when and how much you will be paid out if you suffer from a dread disease.
From April next year this information grid will be included in all quotes, making it easier to compare the different policies.
The disclosure grid will indicate what percentage of the insurance cover will be paid out for four different severity levels applied to the four major medical conditions: heart attack, cancer, stroke and coronary artery bypass graft. These conditions make up to 90% of all critical illness claims.
Unfortunately, the new definitions are not any simpler as they still pertain to medical conditions but they are consistent across the different insurance companies.
So no matter which insurance company you are with, you will be paid out according to a set standard of medical definitions.
As a policyholder you should be able to use the grid to understand at what stage you will be paid out based on the severity of the condition.
There will be a main definition that will have four levels of severity ranging from A to D, with A being the most severe and D the least.
Each “main” definition will be accompanied by a “layman’s” definition.
The payment will be in line with the severity of the condition in that level B cannot receive a lower payment than level C.
Yet, although medical definitions on the severity of the illness will be standardised, the amount you are paid out is not.
Each insurer will pay out different percentages of the cover based on the severity.
For example, one insurer may pay only 25% on first-stage cancer, whereas another may pay out 100%.
The grid makes it easier to compare the cover between insurers so you will know what you are covered for.
It is important to remember that these definitions pertain only to the four major disease categories.
Policies will therefore vary in terms of any additional conditions that are covered.
It is expected that this move on dread disease cover is just the first step towards a broader set of definitions for the insurance industry, including further definitions on dread disease as well as disability cover.