There is a way to address this complex product in a simple way.
The dread disease product in four key can be summarized :
1 . The event claims
2 . The definition
3 . The design
4. Sickness Incidence
Pillar 1 : The event claims
It refers broadly to the medical conditions covered by the product , such as heart attacks and cancer . Some products cover a long list of conditions that looked impressive while others have a shorter list, which makes the product appear less comprehensive. But it can be tricky and therefore we have to look at the other three pillars to see a more complete picture.
Pillar 2 : The definition
It becomes more complex to understand, because dread disease products does not cover every stage or grade of each disease condition. To keep the product more affordable a description is given of each claim event to describe the requirements to enable payments of the claim. Some definitions may be so severe that a claim will only be paid at a very late stage of the disease. Make sure to read and understand the fine print of your cover.
Pillar 3 : Design
In order to analyse the product properly one should pay close attention to the product’s design. How is the payment of claims structured ?
A simple example is as follows :
- one product may only cover 50 % of a heart attack claim , where a another policy has 100 % coverage for the claim .
- in the event of cancer , some products may only pay 25 % of the first stage of cancer, while another will provide 100 % coverage for the same claim.
To determine whether these percentages is sufficient or not , it would be essential to look at the final pillar as part of our analysis.
Pillar 4 : Disease Incidence
This is the most important pillar, because not each event or person is the same. What would be your chances of being more susceptible to one disease over another? Approximately 85 % of all critical illness claims in 2012 were for four medical conditions :
- • Heart Attacks
- • Cancer
- • Stroke
- • Bypass surgery (Heart)
A product with a long list of claim events is not necessarily a better product if the majority of the claims statistically shows a low incidence. It is important to bear in mind that no person is identical and each person’s circumstances are different, and therefore you must choose the most suitable product according to your own individual needs.
Source : FA News – October 2013