financial advisors | with you: all the way



Nobody enjoys contemplating their own mortality and the financial consequences for their family if they were to contract a serious illness or disease. However, there is a very good chance that you will contract and survive a major illness such as a heart attack, stroke or some form of cancer before you die.

While medical schemes provide help in meeting the medical costs associated with illness, surviving major illnesses and paying for post-event services is entirely different. These post-event services include funding of lifestyle changes, and the additional expenses associated with suffering due to these illnesses.

When do critical illness benefits pay out?

Critical illness benefits pay out upon the diagnosis of a specific stage of a named disease. Currently, the range of benefit categories has been expanded to include less common conditions. Worldwide, products are available with hundreds of benefit categories; this has been circumvented by the use of the “catch all” or “comprehensive” criteria for certain disorders not specifically named.

Assessment of critical illness claims does not rely on the occupation or the ability to work. There is no subjectivity in the assessor’s mind about the claim, since the definitions are stipulated in the policy contract. Hence, it is more likely that critical illness claim would be paid well before a disability claim, the latter warranting further investigations into your ability to do work.

How much cover is required?

Though in many cases, your medical aid will cover a large proportion of your medical expenses when you contract a critical illness, other factors to consider are as follows:

  • Do you have sick leave and normal leave payable through your employer?
  • Will your employee benefit scheme provide a realistic income? Many employee benefit schemes provide a disability income based on a percentage of your pensionable salary, meaning that your actual income may be substantially lower than your normal salary.
  • Will there be increased household costs, such as long-term nursing or after-care for the children?
  • Will additional capital be required to cater for possible home or vehicle modifications?
  • Will the illness result in you needing to take early retirement, or needing to make lifestyle changes that could result in reduced earnings up until retirement?

Once these questions are asked and all your issues and needs understood, a suite of benefits can then be compiled to meet your needs and budget constraints. This could prove to be a combination of temporary and/or permanent disability income benefits and lump sum disability benefits and critical illness benefits – designed to meet short-term and long-term incapacity needs along with specific critical illness coverage.

Standardised Critical Illness Definition Project (‘SCIDEP’)

Companies offering critical illness benefits have realised the need for greater simplicity. The first industry attempt at tackling “complexity” of definitions was SCIDEP, which clarified a set of standard definitions and severity levels for each of the four main critical illnesses (heart attack, stroke, cancer and coronary artery bypass graft (‘CABG’). These four illnesses represent approximately 70-90% of all claims.

From September 2009 life insurance companies belonging to the Association of Savings and Investments South Africa (‘ASISA’) have been required to disclose the minimum percentage of the benefit which will be paid out at the four ASISA-defined severity levels applied to the four main critical illnesses as follows:


Most severe



Moderate impairment



Mild impairment



Almost full recovery


Functional impairment benefits, critical illness benefits, disability cover and income protection

Functional impairment benefits cover you for events of a permanent physical and functional impairment, regardless of whether or not you can perform your occupation. The uncertainty associated with assessing your ability to continue working is thereby removed.

Critical illness benefits cover you for being diagnosed with a specific illness, suffering from a specific condition or undergoing a specific procedure.

Disability cover is linked to your ability to perform your occupation and pays a specified lump sum in the event of a permanent disablement which results in you not being able to work.

Income protection benefits provide a specified monthly amount the event of you becoming temporarily or permanently disabled due to an accident or illness until you reach a specified age.

Tiered benefits versus 100% payout

A clear distinction should be made between tiered benefits and 100% benefits. When a needs analysis is done you have to decide whether you require a 100% payout of the insured amount at diagnosis or if you would prefer a tiered payout (as indicated on the SCIDEP table).

The main benefit of a 100% payout is that you can receive a material amount of capital that you can use for immediate expenses or it can be invested for the long term to address future needs.

The main benefit of a tiered payout is that it can be aligned with possible lifestyle adjustment which comes to light at diagnosis, and the benefit will stay in place and grow for any future needs for payouts which are linked to the same condition, or any other illnesses.

Future insurability

When you suffer from any of the major critical illnesses, your chance of ever qualifying again for disability cover or life cover is severely depleted, or it will become very expensive. This is why you need to set up some fund as security for this purpose, and you can do it with critical illness cover. However, critical illness cover should not be seen as a replacement of disability cover, and equally, disability cover should not be seen as a replacement for critical illness benefits.

We do not take into account any group benefits that you may have with your employer because private risk cover links to you for your entire life, irrespective of where you should work in future. If you contract a critical illness while you work for an current employer their group scheme and your private insurance company will most likely both pay out their stated benefits, and no aggregation will be applied.


Our strategy with regards to critical illness benefits is to always implement:

  • it at the same company where income protection, life cover and lump sum disability benefits have been implemented based on priority;
  • stand-alone benefits equal to at least our clients’ annual earnings;
  • the most comprehensive benefits available at a 100% payout scale;
  • benefits on the level premium pattern with a maximum guarantee period (unless another premium pattern is specifically requested); and
  • the term of the product as whole of life (and not only until age 65).

The information provided with this fact sheet provides a broad overview of critical illness benefits. However, we make recommendations and implement solutions based on an individual’s unique circumstances taking other considerations into account as well. Please contact us if you would like to assess your current portfolio to identify possible gaps that need to be addressed.