A sharp rise in multiple severe illness claims – alongside the mounting financial toll of childhood illnesses – is reshaping the conversations financial advisers need to have with their clients. These trends came to the fore in Discovery Life’s latest claims report, highlighting the growing importance of future-proof insurance cover.
The report, released this week, showed that the life insurer paid out a total of R11.5 billion to clients over the past year. This included R6.85bn in individual life insurance claims, R2.4bn in shared-value payments – rewards for clients who engage in healthy behaviours –and R2.3bn in group risk claims.
Of the R6.85bn paid to individual clients, R3.4bn went towards life cover claims.
Living benefits accounted for R3.1bn, with R1.5bn paid out under the Severe Illness Benefit, R933 million under the Capital Disability Benefit, and R673m under the Income Continuation Benefit.
An additional R260m was paid for products such as the Global Education Protector, funeral policies, and other ancillary benefits.
The figures show that Discovery Life paid more in living benefits and shared-value rewards – a combined R5.5bn – than in traditional mortality claims.
This shift reflects a broader trend in the insurer’s data: a notable increase in the recurrence of severe illnesses such as cancer and cardiovascular disease.
The insurer’s 2024 claims data shows that clients who previously claimed for a severe illness before 2024 made up just 4% of its risk pool, yet accounted for almost one in four severe illness claims this year.
In total, the insurer paid R1.54bn for 2 900 severe illness claims this year. Of that, R275m was paid out for second or subsequent claims. Nearly one in three clients who received these follow-up payments had made three or more severe illness claims, with some having claimed more than 10 times.
The report also highlighted R128m paid in Converted Severe Illness claims – benefits paid when a client’s disability cover expires and automatically converts to illness cover, ensuring continued protection as clients age.
Discovery Life deputy chief executive Gareth Friedlander noted that illness cover and features such as automatic disability benefit conversion are crucial to ensuring clients have illness protection at older ages.
“This is very relevant, considering that 28% of severe illness claims are made by clients over 60. Ten years ago, this age group accounted for 11% of our illness claims and five years ago it was 20%,” said Friedlander.
Tailored cover crucial amid rise in multiple illness claims
Daniel Stoch, the head of research and development at Discovery Life, described the company’s annual data as a vital resource for financial advisers aiming to tailor cover to evolving client needs.
One of the most striking patterns emerging from recent claims data, he said, is the high prevalence of multiple severe illness claims. These are not isolated cases, Stoch noted, but part of a growing trend linked to improved treatment and survival rates.
“It is so crucial for a client to have a long-term, future-proof product when taking out cover, because gone are the days that your first heart attack kills you,” he said.
Advances in medicine, early detection, and lifestyle changes mean many people survive a first cardiac event and live for decades afterwards. However, he warned, the risk of future claims rises significantly after such an event.
“We see that the risk of future claims after that first cardiac event is exponentially higher. And it’s important that you’re selling cover today to your clients that is going to be future proof when it comes to covering those future events over a long period of time,” Stoch explained.
But this is where product detail becomes critical. He urged advisers to dig deeper into policy wording to understand how multiple claims are treated.
“Often the devil is in the detail of different policies, and advisers need to understand what do the multiple claims facility look like on the severe illness product that you’re selling to your clients, and will it cover the multiple claims that happen? Are they of higher or lower severity compared to the previous claim? Are they related or not related to the previous claim? These are the types of details that financial advisers will obviously need to understand and advise on.”
Stoch cautioned that once a client has experienced a major event, such as a heart attack, their ability to get new cover is compromised.
“You’re no longer going to be able to get cover related to heart and artery, and that’s an obviously very exposed position for a client to be in,” he said.
Child illness cover often overlooked
Beyond the individual, Discovery Life’s statistics also spotlighted an often-overlooked area: child protection.
The data highlighted the importance of family protection benefits included in the cover. Discovery’s internal research suggests that 1 in 10 children will experience a life-changing health event before the age of 18.
In 2024, more than 270 claims were paid under the Automatic Child Severe Illness and ParentCare benefits, with a combined payout of R13.8m.
According to Friedlander, the impact of a serious illness or disability in a child is rarely factored into protection strategies – by either clients or their advisers.
“I’m not sure there is a more life-changing event than a child cancer. It’s got a devastating impact on one’s entire life. You probably would want to stop working, take your child for the best treatment possible, wherever that may be, locally or abroad.”
And in those moments, financial strain should not be an added burden.
“The last thing you want on top of everything you’re dealing with in those scenarios is financial strain as well. You want to know that financially, you’re sufficiently covered to throw whatever you need to at your challenges in those scenarios,” Friedlander said.
