31 August 2021
RISK
The link between the big four illnesses and the pandemic
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evere illness pay-outs increased over the last year and are likely to continue to reflect increased pay-outs over the next year as a direct consequence of reduced services and increased fears around the COVID-19 pandemic. Illness cover claims stats “The Old Mutual 2020 Claims Statistics report, which was recently released, reflects a 95% pay-out ratio for illness cover claims, adding up to a total of R871m,” says Jay Naidoo, Executive General Manager for Agency Franchise Distribution at Old Mutual. Naidoo says the illness pay-out amount increased 18% from the previous year. Cancer and tumours accounted for the largest proportion of illness claims at 45%, followed by cardiovascular disorders at 27% and central nervous system disorders at 14%. The link to COVID-19 “This increase in illness pay-outs
corroborates a study by the World Health Organisation (WHO) last year, which found that people with illnesses such as cancer and cardiovascular disease were not receiving the health treatment they needed since the COVID-19 pandemic began. Reasons included disruption of health services and a reluctance to enter the medical environment for fear of the increased risk of contracting COVID-19,” Naidoo says. The survey, which covered 155 countries, found that the postponement of public screening programmes such as mammograms (breast cancer) and pap smears (cervical cancer) was also widespread, reported by more than 50% of countries. This was consistent with initial WHO recommendations to minimise nonurgent facility-based care while tackling the pandemic. The most common reasons for discontinuing or reducing services were cancellations of planned treatments and a lack of staff because healthcare workers had been reassigned to support COVID-19 services. Bente Mikkelsen, Director of
the Department of Noncommunicable Diseases (Severe Illnesses), at WHO said it would be some time before the full extent of the impact of the healthcare disruptions could be determined, with specific reference to patients with severe illnesses. “While exposure to COVID-19 could be devastating for someone with a severe illness, not addressing their medical needs could be just as fatal,” Naidoo says. The costs of big illnesses Old Mutual found that the big four illnesses (cancer, heart attacks, strokes and coronary artery bypass grafts) contributed to 70% of the illness claims paid in 2020. Old Mutual’s illness insurance offers true customisation, total flexibility and immediate cover. “When you contract an illness, there are numerous financial costs that you will have to address, including treatment. Old Mutual’s illness insurance ensures that those needs are addressed so that you can focus on the important things, such as your recovery and time with your loved ones,” Naidoo says.
“The role of the financial adviser becomes vital when a customer contracts an illness. The adviser steps in to help you access your pay-out, allocate money to the expenses incurred, and reinvest what is left. Your financial plan will also need to be revised to ensure that your new circumstances and your family’s financial needs are provided for,” he adds.
Jay Naidoo, Executive General Manager: Agency Franchise Distribution, Old Mutual
E-cigarettes and life insurance policies BY CLYDE PARSONS Actuarial Executive, BrightRock
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or decades now, we’ve known that smoking is bad for our health – the research has conclusively shown that smoking increases your risk of suffering from cancer, heart disease, stroke and lung disease, among many other conditions. This is the reason why smoker rates are higher than non-smoker rates in life insurance. Smokers can pay more than double the premiums that a non-smoker would pay, depending on factors such as age, pre-existing conditions like those mentioned above, and how you’ve structured your policy. But many people are unaware that regular users of e-cigarettes are also charged smoker rates when it comes to life insurance.
Why do vapers get charged smoker rates? E-cigarettes are battery-operated products designed to deliver nicotine, flavour and other chemicals. They turn chemicals, including nicotine, into an aerosol that is inhaled by the user. Most insurers in South Africa, including BrightRock, charge the users of e-cigarettes the same rates that we charge smokers of traditional tobacco products. There are a number of reasons for this. Firstly, e-cigarettes, such as vapes, contain smaller doses of nicotine, and other harmful substances such as ultrafine particles, flavourants and heavy metals. While the levels of nicotine are smaller than they are in traditional tobacco products, they still pose some risk to the long-term health of the user. That being said, some e-cigarettes can contain even more nicotine than normal, combustible cigarettes. Secondly, as e-cigarettes are still relatively new in the market, not enough research has been done to investigate the health risks that come with using them. However, some of the available research shows that consuming e-cigarettes has been associated with an increased risk of chronic cough, bronchitis and asthma. E-cigarette smokers are also believed to be more susceptible to respiratory infections and poor cardiovascular health. What if someone is vaping because they want to quit smoking? The World Health Organisation (which has stated unequivocally that e-cigarettes are harmful to your health) says that of the world’s 1.1 billion smokers, 60% want to quit. Many tobacco smokers use e-cigarettes to help them quit. When underwriting clients for life
insurance at BrightRock, we ask if they smoke or use any other nicotine products other than cigarettes, such as cigars, pipes, hubbly bubblies, e-cigarettes, or even nicotine gum. If clients have used any of these products within the preceding 12 months before their applications, we’ll charge them smoker rates. This is because smokers – regardless of whether they’re inhaling nicotine from combustible or e-cigarettes – are most likely to relapse within 12 months of quitting. When do non-smoker life insurance rates apply? Giving up smoking is not only worth it from a health perspective but also from a life insurance premium perspective. If a person hasn’t smoked or used nicotine products for 12 months, they can apply to get non-smoker life insurance rates. The insurer will ask them to sign a non-smoker declaration and do a cotinine urine test. If the test comes back negative, this could reduce premiums by up to half, which, at a time when everyone’s watching their spending, is definitely worth considering. What if a person has a policy and starts smoking or vaping? The effect on their cover and premiums will depend on the insurer. At BrightRock, you don’t need to let us know if you start smoking or vaping, and your premiums and cover will not be affected; having started smoking after your policy started won’t affect your claim. However, it’s important to know that there are many insurers in the market that do require people to notify them if they start smoking or vaping – if they don’t, these insurers can reduce or even decline claims as a result.
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