What is severe illness cover? Do I need it?

3 min readFeb 24, 2022

Severe illness cover is one of those horrible sounding ‘adult’ things that you probably keep pushing down your to-do list. It’s also sometimes called critical illness or dread disease cover. (Morbid, we know.) As the name suggests, it’s a form of personal insurance that helps you financially if you’re diagnosed with a life-changing illness.

You might be thinking: I already have medical aid and gap cover, why do I need this cover? Well, severe illness can help pay for things that are not covered by medical aid or gap cover, especially things that aren’t linked to your actual treatment in hospital, like modifying your home to accommodate a wheelchair, for example, or modifying your car, paying for at-home nursing or having to work reduced hours. Depending on how comprehensive your medical aid and gap cover plans are, severe illness cover might also cover any medical expense shortfalls.

Which illnesses are typically covered?

The following four diseases account for the majority of all severe illness-related claims in South Africa, and are covered by most insurers: heart attack, cancer, stroke and coronary bypass graft surgery.

Most insurers will provide you with a list of other illnesses that are covered — it’s worthwhile comparing this list between plans. Some policies also include a ‘catch-all’ clause designed to give you cover for a disease that’s not itemised, but which is also severe.

How does the benefit payment work?

Typically, the benefit is paid out as a tax-free lump sum at diagnosis, and the amount varies according to the severity of the disease. For example, a cancer diagnosis at an advanced stage will typically lead to a 100% pay-out, whereas cancer at Stage 1 might lead to a 25% pay-out, with further payments to come if the illness progresses.

The insurer will typically have limits to how much can be claimed for the same illness. For example, Lindiwe has R1m severe illness cover and is diagnosed with Stage 1 cancer. Her benefit payment comes to R250,000. Unfortunately, she does not respond well to treatment and the cancer progresses to Stage 4, which qualifies for 100% payment. Since she already received 25% and she’s claiming for a related illness, the insurer will probably cap her total and pay her the remaining R750,000.

In another scenario, say she beats the cancer but ends up with heart complications. If she claims for a different severe illness as her second claim, she might receive 100% of her benefit despite having already received 25%.

These rules can be complicated, so be sure to understand the benefit structure.

Should I get accelerated or standalone cover?

If you already have life cover (insurance that pays out upon your death), you can attach severe illness cover to the policy as an ‘accelerated’ benefit. When a severe illness claim is paid, it reduces your life cover that remains. The advantage is that your monthly premium will probably be cheaper than if you take our standalone severe illness cover.

Taking standalone cover means you don’t need to have any other policies in place. If you do have a life policy, it will be unaffected by any severe illness claims. This is important if you need your life cover amount to stay intact over time.

Look at the bigger picture

Severe illness, life insurance, income protection and disability cover all have their place in protecting you and your loved ones from life’s inherent risks. It’s important to look at the bigger picture when taking out cover — your health, your family and work situation, your monthly expenses etc. — and to understand what cover you might already have through your employer.

If you’re confused, set up a meeting with a financial advisor who will be able to help you with this exercise.

Good luck!




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