By: Tony Singleton, CEO at Turnberry Risk Management Solutions
Medical Aid and Gap Cover – why brokers and financial advisors are essential
Many consumers often question the role of financial advisors, considering the wealth of information that’s available online, and the ease of directly purchasing policies and other financial products.
However, the role of a financial advisor, is as important today as they’ve ever been.
From a Medical Aid and Gap Cover perspective, financial advisors help you to consider the right products, to fit with your unique needs and to complement your broader financial management and risk mitigation strategies.
We all have unique situations, and unique health risks and concerns, so having somebody that is objective, and familiar with your life, gives you a greater chance of choosing Medical Aid and Gap Cover policies that are suited to meet your needs.
TAILORED TO YOUR NEEDS
There are numerous different Medical Aid and Gap Cover options out there, all positioned slightly differently, all emphasising different benefits. Without the guidance of a trusted and accredited advisor, there is a good chance you’ll end up with policies that aren’t ideally suited to your needs.
In addition, as your family’s financial and health position changes over time, your policy choices will also need to change. Therefore, having regular meetings with your financial advisor is absolutely critical. Remember that, over time, the structure and pricing of policies will also change – with new benefits, new limitations, and other rules.
The broader regulatory environment is also subject to change. For instance, just last year Treasury announced long-awaited reform to the Medical Insurance industries, with its so-called ‘Demarcation Regulations.
The Demarcation Regulations clearly differentiated between Medical Schemes, and other Medical Insurance products which includes top-up cover like Gap Cover, Dread Disease Cover, Medical Travel Insurance, Hospital Cash Plans, and the like.
Financial advisors should be aware of the changes to individual products, as well as the broader environment, drawing on these insights as they select the best possible policies for you.
EXPLAINING RUNAWAY MEDICAL INFLATION
Some consumers also question the need for Gap Cover when it’s advised by their financial advisor.
Gap Cover policies have risen to the fore in many financial advisor- client conversations in recent years – driven by a few different factors. Perhaps the biggest reason for Gap Cover’s surge in popularity has been the increasing limitations imposed by Medical Aid schemes.
Some years ago, healthcare professionals and facilities would charge according to the National Health reference price-list. Since this has changed, we’ve seen the prices charged by many specialists, becoming increasingly detached from these original base levels.
Today, it’s not uncommon to see specialists charging three, four, or even five times the stipulated rate that Medical Aid schemes are willing to cover. This runaway inflation has, itself, been driven by massive changes in the industry – rising input costs, indemnity costs, and severe skills shortages.
All this leaves us in the place we’re at today: where Gap Cover has emerged as a way to protect consumers against shocks like huge co-payments, sub- limits and other shortfalls not covered by one’s Medical Aid.
In fact, 75% of the claims we process at Turnberry are for medical shortfalls from providers that are charging above Medical Aid rates.
It’s for this reason that Gap Cover is generally advised by financial planners, as an important tool in one’s broader wealth building strategy. This is particularly important when we consider that out-of-pocket medical expenses can cause a huge dent in one’s savings and potentially place families at huge financial risk.
Rather than ‘going it alone’, the smart option is to use financial advisors to manage relationships with your Medical Aid and Gap Cover providers, as well as Investment houses and other financial services firms. In this way, you’ll help to ensure that your array of financial and health products are aligned with your unique needs.