Momentum Life Insurance’s 2023 claim statistics highlight the glaring gap in critical illness cover among South Africans.
Joretha Bothma, the head of product development, underwriting, and claims at Momentum Life Insurance, reported that 57% of all death benefit claims in 2023 were due to cardiac and cancer events. However, more than 80% of the persons for whom death claims were paid did not have critical illness cover with Momentum.
During a webcast on 14 June, Bothma asked the online audience to imagine the financial impact of these critical illnesses – not only on income, but also on retirement savings. Bothma said the direct costs of surgery, treatment, and palliative care can be overwhelming. For instance, individuals with Alzheimer’s or who are recovering from a stroke face significant financial strain.
“So, it’s a reality. And I just want to once again plead with financial advisers. Please make sure that this forms part of a comprehensive plan.”
Bothma was a member of the panel that discussed the practical implications of Momentum Life Insurance’s claims insights.
George Kolbe, the head of Momentum Life Insurance marketing, provided an overview of the 2023 claims, disclosing that the insurer paid out about R6.5 billion in claims across its retail products, including its older offerings and the Myriad life insurance product. Myriad alone accounted for R5.6bn in payouts last year.
In 2023, Momentum paid out R4.02bn for mortality claims, with the largest claim amounting to R117 218 393. Critical illness claims totalled R830 million, with the largest claim reaching R8 162 749. Lump-sum disability claims came to R486m, including the largest claim of R28 380 293. Income protection claims totalled R285m, with the largest claim being R28 195 664.
Kolbe agreed that the one that stood out was critical illness claims.
“We do think that might be a slightly under-serviced part of the market. We do believe, especially looking at the main causes of death claims, that there should be more critical illness cover in play. We should see more claims payouts in that space,” he said.
Mortality claims
Wesley Paton-Tiffin, technical marketing actuary at Momentum Life Insurance, provided insights into Momentum Life Insurer’s mortality claims, highlighting a record-breaking payout of R117.2m through Myriad.
This claim involved a business owner who suffered a gunshot wound, which was ruled as an accident rather than suicide or murder. Cover for this event was secured over nearly two decades through eight business insurance policies.
Paton-Tiffin said: “At R117.2m, it really makes the point of the power of financial planning … Before that came the skill of financial planning to quantify the impact and make sure that when tragedy struck, the business could continue, and people could still have jobs.”
Cardiovascular events and cancer accounted for more than half of death claims, with unnatural deaths, respiratory, and nervous system conditions rounding out the top five causes.
Paton-Tiffin noted a higher incidence of claims among men – particularly among older men with business assurance policies – despite equal the gender distribution of policies. More than 60% of claims were from policyholders over 60.
There were higher cancer claims among women, but significantly fewer unnatural death claims compared to men.
Notably, accidents – primarily motor vehicle accidents – accounted for 45% of unnatural deaths, with a troubling trend showing 65% of these deaths were among policyholders under the age of 30.
“The reality is that life happens, the unforeseen happens, and anything could happen. So, the takeaway here is really to make sure that your clients’ cover is always up to date and that they have that cover as soon as possible,” said Paton-Tiffin.
Terminal illness claims
Paton-Tiffin also addressed terminal illness claims, where R120.9m was paid out in 2023. These are death claims paid out while the client is still alive. He explained that, essentially, the prognosis is that there is no hope for recovery and death is expected unequivocally to occur within 12 months.
“So, we pay out the life cover, essentially so that the clients and their family can get their affairs in order,” he said.
Cancer predominated these claims, along with respiratory and nervous system conditions. Terminal illness claims spanned all age groups.
In 2023, 71% of claimants were men and 29% were women. The youngest claimant was a 36-year-old woman with stage four breast cancer. The oldest claimant was an 80-year-old man who had stage four prostate cancer.
Living benefit claims – critical illness
Living benefit claims encompass critical illness, disability, and income protection claims. Paton-Tiffin emphasised the value of critical illness cover, noting it pays out while clients are alive, preventing financial strain.
The largest critical illness claim of R8.2m was paid to a 51-year-old female director with Hodgkin’s disease.
“The amount sounds fairly large, and it’s a function of the maximum amount that we allow at new business stage, and cover growth over time. Now, while our house view is that clients should at least have R1m worth of critical illness cover, ideally, we recommend clients take as much cover as they can afford,” said Paton-Tiffin.
Regarding the reasons for critical illness claims, cancer led at 44%, followed by cardiovascular events, musculoskeletal, and nervous system conditions. Gender-wise, while claims were evenly split, there were notable differences in causes. Women predominantly claimed because of cancer (54%), followed by nervous system, cardiovascular, and musculoskeletal issues.
For men, cancer remained the top cause, followed by cardiovascular events, musculoskeletal issues, and nervous system conditions, with respiratory conditions rounding out the top five causes.
Disability claims
According to Nafeesa Gaida, the head of claims at Momentum Life insurer’s, 2023 marked the Life Insurer’s largest lump-sum disability claim to date – R28.4m paid based on occupational disability. This claim, involving a 49-year-old business owner injured in a motorcycle accident in December 2020, included shoulder dislocation, torn biceps, rib fractures, and a spinal fracture. Despite surgeries and rehabilitation, he was deemed occupationally disabled in 2023.
“Our occupational disability benefits also have this functional impairment benefit that pays out in the event that the client is impaired as a result of disability… This is a business assurance benefit, and the benefit of a business assurance benefit is that it allows for a payout in the event of a catastrophic event to allow business continuation,” said Gaida.
Income protection claims
In 2023, Momentum Life Insurance’s largest income protection claim was R28.2m, facilitated by its permanent disability enhancer.
The claimant was a business owner suffering from rheumatoid arthritis. He became permanently disabled after failing to respond to medication, said Gaida.
She explained that because the client had the permanent disability enhancer linked to his income protection benefit, he could convert all his future monthly payments into a lump-sum payment.
The youngest lump-sum disability client was 25 years old. He sustained multiple injuries, including limb amputation, following a fall. Besides qualifying for lump-sum disability, under the functional impairment underpin, the client also qualified for a critical illness payment because he was in hospital for a total of 105 days.
Across lump-sum disability and income protection, the top causes included musculoskeletal, cancer, and nervous system issues. Gaida noted that musculoskeletal conditions were more prevalent in income protection because they are often temporary, linked to sports injuries or accidents.
Claims for psychiatric or mental conditions typically involve temporary conditions such as burnout or stress.
“When looking at psychiatric or mental conditions under permanent disability, this is a little bit more difficult and tricky because the criteria to meet a lump-sum disability are a lot stricter,” she said.
When a claim is not valid
According to Bothma, Momentum Life Insurance paid 9 000 claims in 2023, amounting to nearly R27m paid out each day.
Kolbe said one of the insurer’s principles is that it pays all valid claims.
However, he acknowledged that not all claims qualify, such as those involving non-disclosure or suicide within the first two years. These cases represent a small percentage of claims. Specifically, for life cover alone, 99.9% of claims were paid.
Kolbe said the main reason Momentum Life Insurance does not pay claims is when clients try to claim for a benefit they do not have. For example, a client might make a disability claim but have a critical illness benefit, or the other way around.
Sometimes, the client has the benefit, but it’s too early in the process. “So, it hasn’t quite made the claims definition yet, and in an instance like that it would not be a valid claim, and we wouldn’t pay out. That would really be irresponsible, and I think you can set the wrong precedent. It might also jeopardise claim payouts for clients that do have valid claims,” said Kolbe.
