Critical illness cover or dread disease insurance is lump sum cover that pays out on the diagnosis of a severe ailment such as cancer or heart disease. It is a risk-benefit that has only been available since the 1980s, but has grown in relevance as people are living much longer than in the past. Yet the uptake has been less prominent.
Up to the end of the 1970s, the biggest threat to a family's financial well-being was the death of a breadwinner. If someone had a heart attack or got cancer, they typically died. It is for that reason that life insurance became such an integral part of an individual's financial plan, and in some respects continues to be so.
But as medical science progressed, more people survived these dreaded diseases. This has come at a cost -- and yet the replacement rate of critical disease cover has been extremely low.
It is a consequence of that legacy, but life insurance makes a lot less sense when you stop working, and with medical aid price increases way beyond inflation, additional health coverage does make more sense.
I've heard horror stories of families left bankrupt due to a combination of a...