Last Updated on July 24, 2022 by The MediFi Guy
When you purchase insurance you have to go via a middle man called a broker. Usually, that broker comes in the form of a financial advisor authorized to sell a particular company’s insurance products. The broker gets a commission for whatever they manage to sell you. Hence the broker is incentivized to sell you as many products as possible to maximize commissions.
That’s why it’s important that you fully research and understand what you’re considering buying, whether it is appropriate for you, and how much it will cost over your lifetime.
It is your responsibility to find out this information. The broker will attempt to make everything sound appropriate for you and will usually not show you alternatives, or how much it will cost over time.
If you do not fully understand what you’re buying then it’s probably best to hold off until you do. Otherwise, you may end up falling victim to expensive and inappropriate product options such as whole-of-life insurance with an age-rated premiums structure.
As for what insurance companies you should choose to go with, you shouldn’t stress too much about it. You can’t really make a “mistake” when it comes to picking an insurance company. The main suspect (e.g. Liberty, Old Mutual, Sanlam, PPS) generally offer the same kinds of products. You just need to find the one that suits your own particular circumstances and needs.
That being said, the bare minimum insurance one should have is insurance that protects you in the case that:
- You happen to fall ill and require medical treatment, i.e a Medical Aid & Dread Disease Cover
- You are unable to continue earning your current income due to said physical illness or a resulting disability, i.e. Income protection and Disability Cover
Your choice of medical aid should be guided by your current age, medical history, current health status, predicted future medical conditions, whether you desire to add dependents to your medical aid, and your current and predicted future geographical location/residence. There are many other factors of course but I’d say those are the main ones. In general, the options for Medical Aids Can be divided into 2 broad categories – Hospital Plans, and Comprehensive Plans.
The bare minimum Medical Aid cover one should consider getting is a Hospital Plan. Hospital plans are meant to cover the expense of everything that occurs during a hospital admission, be it an emergency admission or an elective admission. In general hospital plans do not offer any day to day out of hospital cover (eg routine GP visits, dentist visits, medications, etc.), but there do exist variations of hospital plans with limited day-to-day cover in the form of a “health savings” account funded by a portion of your monthly premium which can be used to pay for day to day expenses, or in the form of a defined list of limited say to day benefits funded by the plan itself. A Hospital plan is best suited for a young healthy individual who does not have a history of needing frequent outpatient day-to-day care or medication costs. It’s only to cover the kinds of conditions that would require you to be admitted to the hospital and undergo treatment (medical or surgical) as an inpatient. Therefore it is a necessity to have as a bare minimum cover. It also tends to be the cheapest Medical Aid option.
For those who require something more that also covers the costs of outpatient visits and medications, e.g. a person with pre-existing chronic illness, a Comprehensive Plan would be more suitable. Comprehensive plans cover both hospitalizations as well as day-to-day needs. As a result, they are also more expensive.
You will need to select a plan, be it a Hospital Plan or a Comprehensive Plan, that covers private hospitals in your area. Some plans are limited to covering a predefined network of hospitals whereas other more expensive plans cover all private hospitals. The plans can also be limited to certain provinces, eg “coastal” plans that only cover private hospitals in WC, EC, and KZN. Therefore be cognizant of choosing a plan that you can actually use. You wouldn’t want to find yourself in a position needing admission whereas unbeknownst to you your medical aid covers the hospital 100km away instead of the one down the road. It may also be prudent to choose a plan that covers hospitals in the areas you most frequently visit in the country.
If you intend to add dependents to your medical aid, you should look into whether the plan even offers that option and if it does, whether it covers hospitals close to those particular dependents. You may find yourself having to move somewhere other than your home province for your internship. If you have dependents staying in another province, consider whether the medical aid covers hospitals close to them as well as close to you.
You should have all of the aforementioned things in mind when comparing medical aids, and once you make a shortlist of options best suited to your circumstances you can request a few quotes from a broker/financial advisor and with their assistance select the most appropriate one for you.
After selecting a medical aid, you then have to consider getting insurance for the unfortunate event that you find yourself critically ill or disabled to the point where you cannot continue earning an income. This comes in the form of dread disease cover, income protection, and disability cover.
As of writing, the best option for young doctors appears to be offered by PPS (note: I am in no way affiliated with or sponsored by PPS). The reason I say this is because of the “profit share” offered by PPS. A unique aspect of PPS is that, unlike its competitors who are owned by shareholders, PPS has no external shareholders to whom the profits made by the company are paid out. Instead, the profits made by PPS are shared among PPS members based on the insurance policies they hold with them – the more policies, the higher the share of profits. This “profit share” is distributed to something called a “PPS Profit-Share Account” which is created for you once you become a member and the profits are then invested on your behalf. The profits accumulate over the course of your membership and then become available to you at the age of 66 via the “Vested PPS Profit-Share Account”. This money can then be used by you to supplement your existing retirement savings. This alone makes PPS stand out from the rest.
The bare minimum cover you would need to protect you is Critical Illness Cover (aka dread disease cover), Sickness and Permanent Incapacity Cover (aka income protection), and Occupational & Functional Disability cover.
The Sickness & Permanent Incapacity insurance covers you when you fall sick and are unable to work. In such an event, the cover will continue to pay you your monthly salary every month while you are sick (Sickness cover) and if the sickness results in you being permanently unable to go back to doing your job, the Permanent Incapacity cover takes over which continues to pay you your monthly salary up until the retirement age you chose when signing up for the plan (usually age 65 for most people), at which point it stops. I’d suggest you also read up on the Critical Illness cover, Occupation disability cover, and Functional disability cover.
The Critical Illness cover is a large immediate lump sum of money that you receive in the event that you are diagnosed with a critical illness – eg cancer, stroke, heart attack, etc. You can think of it as a supplement to your medical aid meant to cover more catastrophic con.
The Functional Disability cover is a lump sum you receive in the event that you’re diagnosed with one of a predetermined list of physical disabilities. The Occupational Disability cover is similar but differs slightly in that it covers any disability that specifically renders you unable to perform your occupational tasks as a doctor. It’s best to get both, and also cheaper as PPS offers a nice discount for getting both as of writing.
With the aforementioned insurance options – Medical Aid, Critical Illness, Sickness & Permanent Incapacity, and Functional & Occupational Disability cover – you will be able to rest assured that if something were to fall ill, become disabled, or suffer a catastrophic illness, you would not have to worry about your financial future. That being said, your individual circumstances should determine what you choose, and it’s best to consult with a qualified and registered financial advisor to help select what’s best for you.
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