Critical Illness Insurance Was Firstly Originated In South Africa

Category: Finance, Insurance.

Critical illness insurance was firstly originated in South Africa. Barnard and the chief executive of a life office.

The idea of having a critical illness insurance in South Africa appeared from a discussion between a cardio- thoracic surgeon, Mr. Critical illness insurance was forced to be brought forward as the state health system lacked measures to cover the cost of a range of serious illnesses. According to Munich Re, when in 1983, 2000 critical illness insurance first appeared, nearly all covers could have been riders to life insurance. Let s have a look at how critical illness insurance evolved down the years in South Africa. The highest benefit paid could have been less than R 25, 000( USD 4, 000) and 25 percent of life cover. Nowadays, most of the critical illness policies in South Africa could be prepayment, that is acceleration.

This amount was chosen because it could have been the cost for the treatment of coronary artery bypass graft. The maximum individual cover provided could be R 550, 000( nearly USD 80, 000) while bigger companies could offer up to R 800, 000( approximately USD 120, 000) . Also, recent sales could be estimated to be around 50 percent less than in 199 Moreover, critical illness policy, at first covered 4 main critical illness conditions. In the year 1990, critical illness sales may have been higher than any other policies as it can be estimated that around 60 percent could have been combined to new policies. These could be classified as follows: heart attack, cancer and coronary, stroke artery bypass surgery. Similar to other countries, the trend could almost be considered the same.

But as evolution and competition in the insurance market increased, the critical illness conditions covered gradually became five. As time passed by, the number of cases covered then became more than twenty. Extended cases may be surgeries like balloon angioplasty or states of health such as total and permanent disability. As per O Mahony S, 2001, "South African dread disease report" , most companies may cover up to 8 core critical illness conditions and 21 extended conditions. Furthermore, critical illness cover can be quite expensive in South Africa. The life office agents sell critical illness plans to those who earn less. There may be thus two sales channels that perform the critical illness sales tasks.

On the other hand, the brokers sell to those who earn a high income. According to Munich Re, there may be, 2000 around 14 life insurance companies that offer critical illness cover. As a matter of fact, most critical illness sales have been reported to come from the broker market due to its expensive price. This may account for around 70 percent of all life insurance companies in South Africa. They may be most of the time sold as riders. It can be interesting to note that nearly all the life insurance companies do not offer standalone critical illness covers. Critical illness insurance market in South Africa had become mature quickly.

The market in USA or Canada may still be in process to reach a real peak in contrast with South Africa or even the UK.

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