Decrease Of Critical Illness Sales In South Africa

By: Mike Armstrong
The South African market had not taken much time to adopt critical illness cover. The success of critical illness cover in the South African market may have been one worth considering. Should it not have been this way, critical illness cover might not have reached worldwide destinations as successfully as we see nowadays. However, Munich Re 2000 affirms that accelerated critical illness policies may be enduring a downfall recently. Let’s see.

According to Munich Re 2000, around 60 percent of life policies may have been accelerated with critical illness cover during the late 1980’s. Recent reports carried out may show the fact that this value may have eventually decreased to 25 percent. There may be a reason that could explain this fact. Major medical expenses may be taken in South Africa to provide additional benefits to cope with medical expenses. As a matter of fact, the MME may have been able to close the gap due to the lack of facilities resulting from the healthcare system much better than critical illness cover. Moreover, the MME may be much cheaper than critical illness cover. Also, it may cover much more conditions than critical illness cover.

Another advantage with MME is that it may be offered as a family protection plan. Thus, looking at these factors, people may be eventually losing interest in critical illness cover.

Furthermore, some problems may have been encountered by insurers after the implementation of critical illness cover in the South African market. One problem could be that critical illness claims may have risen suddenly soon after the start of newly taken policies. The majority of claims at that time may have been concerning multiple sclerosis and cancer. Thus, it may be assumed that people may have self diagnosed the critical illness before taking out the cover. Therefore, this may have led to these critical illness claims being rejected as underwriting may have not detected these conditions. So, measures of precaution may have been taken by including the waiting period. The waiting period may stipulate that the claimant should wait for a fixed lapse of time before the payment is awarded. It may be important to point out that some waiting periods may reach around 6 months. But this may also vary according to certain critical illness conditions such as cancer and multiple sclerosis.

In addition to, as in the UK, the success of standalone critical illness cover in South Africa also may have been minimum. There could be some reasons that may have led to the unpopularity of standalone critical illness cover. Firstly, standalone critical illness cover may have been expensive. Secondly, the toughness of certain rules regarding definitions of illnesses may have also been responsible for the lack of sales of this type of cover. Also, dilemmas in connection with legislation and tax procedures may have obliged insurers to keep the product’s high price tag. People may have then preferred accelerated covers such as life with critical illness cover or mortgage with critical illness cover. As a result there may be no more companies offering standalone critical illness policies in South Africa nowadays.

As seen, the recession in sales of critical illness cover in South Africa may be considerable. The MME may be offering more advantages than critical illness cover. But the sales of critical illness cover may not stop here. Insurers may soon come up with a design that could divert attention once again towards critical illness cover.

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