One of my all-time favourite movies was the 1986 hit Ferris Bueller’s Day Off starring Matthew Broderick. It was all the buzz during my teenage years, and we all wanted to be as cool and smooth as Ferris Bueller! During one of the key moments in the movie Ferris says, “Life moves pretty fast, if you don’t stop and take a look around once in a while, you could miss it”. In a way that has always been my personal life philosophy and one of the key drivers in my own physical pursuits including three successful Iron Man competitions and a host of local MTB races.
I am no stranger to unforeseen injuries, and I have experienced that life happens all around us, and while most things we experience are amazing, beautiful, and adventurous, nothing quite prepares us for an unfortunate personal health prognosis, or losing our jobs, or even worse waking up in a hospital bed without any recollection of how we got there. Regular readers of my blog might recall a story I told in one of my previous blog posts (Is Income Protection Worth It?), involving a client, and the importance of being prepared for unforeseen circumstances.
It’s life’s unpredictability that makes it necessary for us to ensure that we are as prepared as we can be, and this is precisely the role and purpose of a Living Risk Plan. While our legacy and investment strategies help us grow and protect our income and wealth, our living risk plan is our action plan in case one of life’s eventualities catches us off guard – almost like a shark net safeguards innocent swimmers on a beach.
A key factor in creating an optimal living risk plan is knowing exactly what we are guarding against; essentially, we try to protect ourselves against four main risk-based scenarios namely:
• Disability.
• Severe Illness.
• Hospitalization.
• Insufficient Cover.
In each of the listed scenarios there are a number of related factors and considerations to keep in mind when we help you create your unique Living Risk Plan.
Disability cover is aimed at protecting the insured’s ability to continue normal day-to-day functioning, specifically where it relates to being able to continue working in order to generate an income.
In the majority of cases insurers refers to this type of cover as Capital Disability. But it doesn’t end here; disability is further sub-divided between physical and occupational disability. In the case of “Physical Disability”, the insured is physically affected but has not lost their ability to work (for example a writer that loses a leg can still write). “Occupational Disability” on the other hand, severely affects the insured’s capacity to work (for example a motor vehicle mechanic that loses both his arms will find it impossible to perform his duties).
Disability cover and benefits will be paid out to the insured on the basis of the severity of the disability and how it impacts the individual. For each of the different benefits and pay out portions, a range of unique qualification criteria will apply. Should you have any questions or if you need any clarification on your unique cover or policy details, please don’t hesitate to contact us.
As mentioned above, I wrote extensively on what income protection entails and why it is worth including this benefit in your portfolio. The importance of being able to earn an income while either recovering from an injury or making the necessary changes at home in order to deal with a disability, is self-evident.
Severe illness cover is similar to disability cover but instead of an accident leading to a diminished capacity to earn an income or to function on a daily basis, the cause of the physical disruption is a dreaded disease or illness. Examples of such illnesses include, among others, heart attacks, strokes, cancer, cognitive impairment disorders (such as Alzheimer’s disease) and many more.
The distribution of monies and benefits are calculated on a unique basis for each illness and will depend on the severity of the illness, the impact on the day-to-day functioning of the insured, the unique composition of the benefit spread and other product benefits.
One important element of severe illness cover is that all payouts and distribution of benefits are dependent on a formal diagnosis being made by a suitably qualified and legally operating health care specialist. Diagnosis will also involve the submission of the necessary pathological tests, screening results, scans, x-rays, or any other medical proof which may be required. Understandably, insurers try to limit the possibility of fraudulent health benefits and claims.
South African citizens have two basic hospitalization options:
• A public hospital or clinic (depending on the severity of the condition or circumstances that led to the hospitalization).
• A private hospital as prescribed by a medical aid scheme or hospital plan.
Hospitalization is considered to be a living risk factor for both health and financial reasons, especially where the reasons and prognosis leading to the hospitalization are serious and severe. Families and loved ones can quickly end up with a large bill to pay at the end of the stay, without sufficient cover.
The above points are of course the basics, more importantly, especially where it relates to living risk factors, are the myriad of administrative tasks such as obtaining approval for procedures, completing, and submitting claims, negotiating better service and rates, administering co-payments, and overseeing the overall process.
As part of managing this risk on your behalf, Oakfield Health, by virtue of our service level agreement and licensing, will ensure that you receive the necessary administrative support to act on your behalf, ensuring you always get what you pay for. Take the time to review some of our services in this regard.
Another important living risk scenario we need to look out for is not being sufficiently insured. This is not to be confused with the short term insurance terminology of being over or under-insured. This blog topic specifically refers to insufficient cover as a living risk factor.
In terms of protecting, you against living risks, what we mean with “insufficient cover” is a situation where you have no means to pay for the difference (or “gap”) between the tariffs (medical scheme tariff also known as MST), and the rate charged by the private healthcare professional. Essentially this is where gap cover offers additional protection to your medical aid cover.
Current Medical Aids in South Africa reimburses healthcare professionals at rates of 100%, 200% or 300% of the approved scheme’s rate. But professionals can charge up to as many as five times the base tariff. Gap cover protects you and your family against these exorbitant charges. In case of serious health issues, this amount can quickly balloon into a substantial amount.
I have learnt, unfortunately, that we are not immune to life’s little curveballs! Things will go wrong, sometimes suddenly and without warning. During the past number of years, I have advised and continue to advise many of my clients on how best to navigate these uncertainties within their available budgets and financial goals.
In spite of our best efforts though, life remains awfully unpredictable, and our best defense is to be as prepared as we can be. This means we need to take the management of our living risks seriously, and we need to review our strategy and plan at least once or twice per year.
If you suddenly decide to take up horse riding or mountain biking, perhaps you need to ensure you also increase your living risk cover as interesting new ways to injure yourself might be on the cards.
Creating a comprehensive living risk plan helps to make sure we can survive and move forward without losing our income, while also being thoughtful of our available financial means. Keep in mind that creating such plans takes time, patience, and consistency.
I am not a fan of fear mongering (there is certainly more than enough of that going around), but we need to be as best prepared as we can be, as life will trip us up at some point – until then, let’s live our lives to the fullest!
I am no stranger to unforeseen injuries, and I have experienced that life happens all around us, and while most things we experience are amazing, beautiful, and adventurous, nothing quite prepares us for an unfortunate personal health prognosis, or losing our jobs, or even worse waking up in a hospital bed without any recollection of how we got there. Regular readers of my blog might recall a story I told in one of my previous blog posts (Is Income Protection Worth It?), involving a client, and the importance of being prepared for unforeseen circumstances.
It’s life’s unpredictability that makes it necessary for us to ensure that we are as prepared as we can be, and this is precisely the role and purpose of a Living Risk Plan. While our legacy and investment strategies help us grow and protect our income and wealth, our living risk plan is our action plan in case one of life’s eventualities catches us off guard – almost like a shark net safeguards innocent swimmers on a beach.
A key factor in creating an optimal living risk plan is knowing exactly what we are guarding against; essentially, we try to protect ourselves against four main risk-based scenarios namely:
• Disability.
• Severe Illness.
• Hospitalization.
• Insufficient Cover.
In each of the listed scenarios there are a number of related factors and considerations to keep in mind when we help you create your unique Living Risk Plan.
DISABILITY
Disability cover is aimed at protecting the insured’s ability to continue normal day-to-day functioning, specifically where it relates to being able to continue working in order to generate an income.
In the majority of cases insurers refers to this type of cover as Capital Disability. But it doesn’t end here; disability is further sub-divided between physical and occupational disability. In the case of “Physical Disability”, the insured is physically affected but has not lost their ability to work (for example a writer that loses a leg can still write). “Occupational Disability” on the other hand, severely affects the insured’s capacity to work (for example a motor vehicle mechanic that loses both his arms will find it impossible to perform his duties).
Disability cover and benefits will be paid out to the insured on the basis of the severity of the disability and how it impacts the individual. For each of the different benefits and pay out portions, a range of unique qualification criteria will apply. Should you have any questions or if you need any clarification on your unique cover or policy details, please don’t hesitate to contact us.
As mentioned above, I wrote extensively on what income protection entails and why it is worth including this benefit in your portfolio. The importance of being able to earn an income while either recovering from an injury or making the necessary changes at home in order to deal with a disability, is self-evident.
SEVERE ILLNESS
Severe illness cover is similar to disability cover but instead of an accident leading to a diminished capacity to earn an income or to function on a daily basis, the cause of the physical disruption is a dreaded disease or illness. Examples of such illnesses include, among others, heart attacks, strokes, cancer, cognitive impairment disorders (such as Alzheimer’s disease) and many more.
The distribution of monies and benefits are calculated on a unique basis for each illness and will depend on the severity of the illness, the impact on the day-to-day functioning of the insured, the unique composition of the benefit spread and other product benefits.
One important element of severe illness cover is that all payouts and distribution of benefits are dependent on a formal diagnosis being made by a suitably qualified and legally operating health care specialist. Diagnosis will also involve the submission of the necessary pathological tests, screening results, scans, x-rays, or any other medical proof which may be required. Understandably, insurers try to limit the possibility of fraudulent health benefits and claims.
HOSPITALIZATION
South African citizens have two basic hospitalization options:
• A public hospital or clinic (depending on the severity of the condition or circumstances that led to the hospitalization).
• A private hospital as prescribed by a medical aid scheme or hospital plan.
Hospitalization is considered to be a living risk factor for both health and financial reasons, especially where the reasons and prognosis leading to the hospitalization are serious and severe. Families and loved ones can quickly end up with a large bill to pay at the end of the stay, without sufficient cover.
The above points are of course the basics, more importantly, especially where it relates to living risk factors, are the myriad of administrative tasks such as obtaining approval for procedures, completing, and submitting claims, negotiating better service and rates, administering co-payments, and overseeing the overall process.
As part of managing this risk on your behalf, Oakfield Health, by virtue of our service level agreement and licensing, will ensure that you receive the necessary administrative support to act on your behalf, ensuring you always get what you pay for. Take the time to review some of our services in this regard.
INSUFFICIENT COVER
Another important living risk scenario we need to look out for is not being sufficiently insured. This is not to be confused with the short term insurance terminology of being over or under-insured. This blog topic specifically refers to insufficient cover as a living risk factor.
In terms of protecting, you against living risks, what we mean with “insufficient cover” is a situation where you have no means to pay for the difference (or “gap”) between the tariffs (medical scheme tariff also known as MST), and the rate charged by the private healthcare professional. Essentially this is where gap cover offers additional protection to your medical aid cover.
Current Medical Aids in South Africa reimburses healthcare professionals at rates of 100%, 200% or 300% of the approved scheme’s rate. But professionals can charge up to as many as five times the base tariff. Gap cover protects you and your family against these exorbitant charges. In case of serious health issues, this amount can quickly balloon into a substantial amount.
CONCLUSION
I have learnt, unfortunately, that we are not immune to life’s little curveballs! Things will go wrong, sometimes suddenly and without warning. During the past number of years, I have advised and continue to advise many of my clients on how best to navigate these uncertainties within their available budgets and financial goals.
In spite of our best efforts though, life remains awfully unpredictable, and our best defense is to be as prepared as we can be. This means we need to take the management of our living risks seriously, and we need to review our strategy and plan at least once or twice per year.
If you suddenly decide to take up horse riding or mountain biking, perhaps you need to ensure you also increase your living risk cover as interesting new ways to injure yourself might be on the cards.
Creating a comprehensive living risk plan helps to make sure we can survive and move forward without losing our income, while also being thoughtful of our available financial means. Keep in mind that creating such plans takes time, patience, and consistency.
I am not a fan of fear mongering (there is certainly more than enough of that going around), but we need to be as best prepared as we can be, as life will trip us up at some point – until then, let’s live our lives to the fullest!