The following article was written by Stephen van Niekerk, Executive Head of Momentum Life Insurance.
Many of us dream of a carefree retirement – having enough money to enjoy our golden years and being healthy enough to make the most of it.
Unfortunately, for many people this isn’t the reality. Often we don’t save enough for retirement, or we face health issues that drain our finances. With medical advancements, we’re all probably going to live longer, even if we’re not in perfect health. The associated costs of healthcare, however, can become a challenge. So, how can we protect our retirement savings and income from these potential expenses?
Understanding the risks
According to Stephen van Niekerk, Executive Head of Momentum Life Insurance, even those who plan carefully for retirement can have their plans disrupted by a critical illness. As we age, our chances of developing serious health conditions increase significantly. Based on Momentum Life Insurance’s claim statistics, during 2023 nearly 50% of all critical illness claims paid were for clients aged 55 and older.
Is a medical aid enough?
Many people assume that their medical aid will cover all their healthcare costs, but this isn’t always true. Medical aid and gap cover usually cover hospital expenses, but there are often caps and limitations. For example, cancer treatments have a financial cap, and anything beyond that comes out of your pocket. Experimental treatments aren’t covered at all.
Out-of-hospital costs, such as palliative care, rehabilitation services (for example physiotherapy and occupational therapy), and home modifications, are often not covered. These additional expenses can create a significant financial burden.
Medical aid is expensive, with costs having exceeded CPI for many years, and it becomes more difficult to afford the older you get, especially in retirement. But the older you get, the higher the need for cover, which creates a conundrum.
How life insurance can bridge the gap
Stephen highlights a concerning trend: People are focusing more on investments and retirement provision, and less on risk protection such as life insurance with critical illness cover. Investments are not a replacement for risk (life insurance) benefits, and risk benefits are not a replacement for healthcare provision. Each plays its own role in ensuring you live a long life without financial or health distress. He suggests a comprehensive approach to managing potential costs associated with critical illnesses:
Good: Have medical aid
Better: Add gap cover.
Best: Have medical aid, gap cover, and at least R1 million in critical illness cover.
Whole-life critical illness cover is also strongly recommended, rather than ending it at age 65.
Why choose Momentum Life Insurance?
Momentum offers several unique benefits:
LifeReturns®offers up to 35% off your monthly life insurance premium: Using smartphone screening technology, LifeReturns® calculates real-time discounts, making life insurance more affordable. In about 90 seconds a ‘selfie’ video measures health risk factors. By answering a few questions about their BMI, fitness level, and medical aid membership, clients receive personalised discounts.
Simplicity of choice: Comprehensive cover with options based on affordability, either with tiered payouts or higher amounts paid earlier. Importantly, breadth of cover is not compromised, as both options cover the same conditions.
Breadth of Cover Guarantee®: This unique guarantee ensures that you are covered for critical illnesses for which all life insurers in South Africa offer cover, even if we don’t usually cover a particular condition.
Longevity Protector®: Momentum’s unique Longevity Protector® – Critical Illness offers ongoing, five-yearly, lump sum payouts when you meet the claims criteria for qualifying critical illnesses, providing funds for long-term expenses. Alternatively, if you reach the age of 80 without claiming, you receive a significant Longevity Enhancer payout to boost your retirement savings.
Conclusion
Even those well-prepared for retirement can have their savings wiped out by a critical illness. Consider whole-life critical illness cover to protect your retirement and ensure you have at least R1 million in cover. Taking these steps can help safeguard your financial future and ensure that you can enjoy your retirement without additional financial stress.