Citing the 155% increase in prevalence of type II diabetes in the last six years in South Africa (according to the International Diabetes Federation), Taylor emphasises that a healthier lifestyle can trim the cost of life and disability insurance cover.
Existing health conditions
There are situations when you have less control over health conditions such as diabetes, hypertension, cancer, HIV, heart disease or even depression when they reach a stage where they can no longer be managed through lifestyle adjustments. While this may mean that your insurance is a little more complex or expensive than the average person, it fortunately shouldn’t stop you from getting cover at all. Through the use of two important insurance tools called ‘loadings’ and ‘exclusions’, an insurer can address even the most challenging health or lifestyle issues but not without affecting the pocket.
A ‘loading’ is an additional cost applied to your premium when a life insurer believes that your state of health makes you statistically more likely to claim than the average person (such loadings may also be applied to recognise unusually dangerous hobbies or working environments).
In such cases, you may still get all the cover you require, but you will pay more for it. Here’s a practical example: Paul, aged 40, has a family history of high cholesterol and his father had a fatal heart attack before the age of 50. Paul’s routine medical tests also reveal that his cholesterol levels are much higher than the acceptable range for his age. Because of this, Paul has a much higher statistical risk of having a heart attack than the average person, so the insurer will apply a ‘loading’ on his premium.
This loading would apply to the premiums for his life, critical illness and disability covers, since his condition makes him more likely to claim under all three of these types of cover. In this example, Paul’s insurer would still pay out for a valid heart attack claim, but he will pay more for his monthly premium.
An ‘exclusion’ is applied to your policy if an insurer determines that the risk of you making a claim related to a medical condition is too great (like loadings, exclusions can also be used for dangerous hobbies or risky occupations). In a case like this, an insurer would provide you with cover with no additional cost, but won’t pay a claim related to that specific condition, hobby or occupation. Exclusions can be permanent or for a specific period of time and insurers are required to inform you upfront of any such exclusion.
You may not see it this way initially when faced with a loading or exclusion, but when you consider all of the potential reasons you might claim, it’s worth having a conversation with your financial advisor before you decide it’s not worth it. Choosing to be without any cover when it is available to you could put you and your family’s financial future at stake.