When it comes to illness, the choice of benefits is critical
Agenda
• Critical illness incidence
• Current take-up
• Why critical illness cover
• Survival rates
• Unique Myriad solutions
• 5 things to discuss with your client
• Opportunities
Technology is doing a better job of keeping us alive. New risk benefits
provide a gateway to this technology
Critical illness incidence
Critical illness incidence
• A 25-year-old non-smoking male has a 24% chance of cancer, heart attack or stroke before age 65
• If he is a smoker, he has a 49% chance before age 65
• 60% chance in his lifetime
Critical illness incidence
• 34% of critical illness insurance claims by males begin prior to age 55
• 58% of men and 79% of women over age 65 will need some type of chronic illness care during their lifetime
Current take-up
Current take-up
• Latest insurance gap study Higher earners 50% underinsured for disability Only looked at replacing income Once-off costs ignored
• Swiss Re survey – only 1 out of 10 individual policies have critical illness benefit
Back to basics : Why critical illness cover?
Medical expenses
• Initial expenses
• Ongoing longer term expenses Chronic conditions
“I have a good medical aid and therefore my medical expenses
are taken care of”
3 reasons why this is a myth
Reason 1: Benefits limited
• Major medical benefit - comprehensively covered
• Day to day benefits out of savings
• Chronic Benefits Prescribed Minimum Benefits – 26 conditions More expensive options – extra conditions included
• Nursing care Nursing home and private nursing – limited
The cost – some examples
• Severe stroke Initial rehab costs
Lifetime chronic medicine cost
• Lifetime cost of disease (R500k to R1m)
• Alzheimer’s Caregiver costs
Chronic medicine cost
• Lifetime cost of disease (R1m+)
US example
• The average couple’s medical out-of-pocket expenditures
Years before death of spouse Percentage of income
5 – 7 years 15%
3 years 25%
Final year 50%
The Health & Retirement Study: Growing Older in America
Reason 2: Cost and cover guarantee
• Medical aid inflation averaged 10% over the past 10 years compared to CPI of 6%*
• No premium guarantee
• Especially problematic in retirement
• Pressure on benefits
• NHI on the way
*Council of Medical Schemes 2010 annual report
Reason 3: Freedom to choose treatment
• Medical aids need to approve all treatments before they pay
• Time to market
• Red tape
• Limits on cancer treatment
• Cutting edge treatment - expensive
Non-medical expenses
• Family support
• Lifestyle adjustments House Car
Reduction in income
• Voluntary or compulsory
• Not always a case of disability Cancer Heart attack
Survival rates
“10% of us will die suddenly, the rest will suffer long protracted
deaths”
Heart disease mortality rates have fallen sharply…
Breast cancer incidence rates are rising whilst mortality is falling…
5 year survival rates from female breast cancer
Source data: London School of Hygiene and TropicalMedicine, Office for National Statistics, 2005
5 year survival rates from female breast cancer diagnosed 1991-2003, England & Wales
“Cancer will be as controllable as diabetes by 2050.”
Professor Gordon McVie
Director of the Cancer Research Campaign and one of Britain’s leading experts in the field.
“95% of cancers will be controllable by 2054.”
Professor Karol Sikora
Medical Director of CancerPartnersUK which is creating the largest independent cancer network in the UK.
Unique Myriad solutions
Conventional solutions fall short
• Critical illness benefits ideal for short term expenses
• Expensive solution for long term
• How much is enough?
Short term expenses
Long term expenses
?
Extends critical illness payout to last a lifetime
Specified moderateto severe critical illness event
Extra 10% every 5 years
Provides additional funding for illnesses with a long-term lifestyle impact
Longevity Protector – Critical illness
Cost-effective Longevity Protector
• 10% to 15% extra premium
• Assuming client lives for 25 years, to match Myriad’s benefit amount will require a 50% increase in benefit and premium
“If you want to provide for the cost of living long with an illness, the Longevity Protector is five times
more cost-effective than conventional critical illness
benefits”
Case study 1
R37 000
R52 000
R70 000
R250 000
Chris, age 45, takes out an Elevated Comprehensive Critical Illness Benefit of R250 000 with level premium and a 10% voluntary premium increase.
Diagnosed with Parkinson’s
Age 45
5 things to discuss with your client
Myriad solution
• Focus on the big three
• Breadth of cover
• Payout levels
• Best of both worlds
• Free cover for children
• Building block approach
Building blocks in action
5 things to discuss with your client
• Traditional or tiered
• Cover for minor illnesses
• Stand-alone or ancillary
• Level or compulsory premium
• Longevity benefit
The need
• Providing for additional expenses
• Providing for a drop in income
Traditional or tiered
• Traditional (Elevated): More cover earlier
• Tiered (Comprehensive): More cover for severe conditions (matching lifestyle impact)
Drop in income Additional expenses
Elevated
Comprehensive
Drop in income Additional expenses
Ancillary
Stand-alone
Stand-alone or ancillary
• Ancillary: Settling liability on first of critical illness or disability
• Stand-alone: Reinstatement Benefit level funding Longevity protection
Drop in income Additional expenses
Compulsory
Level
Level or compulsory premium
• Compulsory Settling liability pre-retirement
• Level Needed for whole of life
Drop in income Additional expenses
No longevity benefit
Longevity benefit
Longevity benefit?
• No longevity benefit Settling liability (once off)
• Longevity benefit Needed for whole of life Ongoing expenses
Opportunities
Opportunities
• Address the medical aid shortfall
• Position critical illness benefits as a means to extend lifespan
• Include critical illness benefits in retirement planning
• Add longevity protection as part of the package
Conclusion
• High likelihood
• High survival rates
• Associated costs
• Low take-up currently
• Optimal solution
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