Personal Finance - INSURANCE / 11 MARCH 2019, 08:09AM / GEORGINA CROUTH
Death and taxes: they’re said to be the only certainties in life. But a study published in The American Journal of Medicine pondered another uncomfortable question: “Death or debt?”
It looked at the financial fallout of new cancer diagnoses on the finances of 9.5 million people older than 50 from 1998 to 2014, at two and four years after diagnosis. The study found that by the second year, a whopping 42.4% had depleted their entire life’s assets. After year four, financial insolvency was 38.2%, with “several consistent socio-economic, cancer-related and clinical characteristics remaining significant predictors of complete asset depletion.
“As large financial burdens have been found to adversely affect access to care and outcomes among cancer patients, the active development of approaches to mitigate these effects among already vulnerable groups remains of key importance,” the study’s authors noted.
Cancer patients in the US were found to be 2.65times more likely to file for bankruptcy than those without cancer.
Additional, hidden costs
Whether or not you belong to a medical scheme, there are additional, hidden costs of cancer that ambush the pocket: non-deductibles and co-payments for treatments, supportive care and other services, along with non-medical costs, such as childcare and loss of income.
In South Africa, cancer is a prescribed minimum benefit, so if you belong to a medical scheme, your treatment will be covered - to an extent. And if you don’t, you should be fairly well taken care of by the public health system.
Discovery Life’s chief medical officer, Dr Maritha van der Walt, says consumers aren’t acquainted with their medical scheme and life policies, so they don’t know what cover they have - or that there are definite limits to that cover. Some cancers are more costly than others and not all available treatments - particularly those in trial phase - are covered.
“People get desperate,” she says. “They hear about a new-generation treatment in Israel or elsewhere, and they want to travel to get it.”
And not enough attention is paid to the “hidden costs” of the disease: for additional care, duration of treatment and recovery, travel for treatment. Van der Walt says often a spouse or parent needs to stop working and that loss of income isn’t covered in most policies. “And if you aren’t near an oncology centre, you need to travel - there might be special rehab, beds, equipment, prosthetics, wheelchairs, etc.”
Dread disease cover
David Weare, franchise principal at Momentum Consult, says that, given the prevalence of cancer, it’s “extremely important for clients to protect themselves against dread diseases and ensure a continuation of their lifestyle in the event of a life changing-event such as being diagnosed with cancer.
“Cancer stats are continuously rising in South Africa, so having dread disease cover in place will make a huge difference to help with any expenses not covered by your medical scheme when seeking treatment.”
Weare says having a financial plan in place will provide you with a snapshot of your financial position and will highlight any shortfalls or surpluses in your plan for death, disability and critical illnesses.
New cancer cases have increased by 33% in the past decade, with “lifestyle cancers” linked to smoking, bad diet and sun exposure rising particularly rapidly in developing countries, according to the World Health Organization.
George Kolbe, the head of marketing for life insurance at Momentum, says cancer is an expensive disease to treat and, although medical schemes do give access to treatments, some of these might be capped in the long run. “Added to this is the cost of cancer treatments versus the quality of care that is actually provided, meaning how well individuals respond to cancer treatments, taking into account the side effects, and how many years it actually adds to their lifespan.
“This is where precision medicine can make an immense difference when it comes to increased success of cancer treatments, limited side effects and the cost-effectiveness of the treatment. Even though our understanding of precision medicine is still in its infancy, it is well on its way to evolve into targeted treatments with verifiable outcomes - but those treatments are the ones that are very costly new-generation, precision immunotherapy drugs can cost R1 million.”
Kolbe notes: “From an insurance point of view, precision medicine does open up new avenues with regards to the way that critical illness cover is structured, especially with early diagnosis. With affordability always an important consideration, it is vital for insurers to provide both tiered pay-out critical illness cover options and options that pay 100% earlier on, with both options covering the same events.
“Selecting the tiered pay-out options ensure that higher cover amounts are more affordable and the financial needs of clients are met as they arise; paying out a smaller percentage on diagnosis of lower severity events and more, if and when, the event progresses.”
He says comprehensive critical illness cover provides clients with additional funds that offer more choice, based on tailored preferences rather than generic availability.
Know your benefits
Van der Walt, who is also the convenor of the medical underwriting standing committee at the Association for Savings and Investment South Africa, says: “Be aware of your benefits. Many people don’t know they have group risk cover through their employer. See your financial adviser to find out about group life cover and other benefits.
“People don’t know or ask for a benefit statement - they don’t understand the difference between the various policy types.”
Start showing an interest in the cover you have, she says.
“We need to be aware: these things are happening, to young people too. It’s happening to people we didn’t think were at risk. These are lifestyle-changing events. Ask those difficult questions: if you get sick, injured, impaired or die, what happens?”