You may have a greater chance of contracting a dread disease before the age of 65 than you have of dying before that age. Yet very few people in South Africa have life assurance against dying and even fewer still have any cover against contracting a dread disease or a severe illness.
A dread disease could have a big impact on your finances in a number of ways.
Professor Stephen Jurisich, the director of actuarial studies at the University of the Witwatersrand and a director of Quindiem Consulting, says statistics from the United States show that the probability of contracting one of the core dread diseases before the age of 65 is nearly four times that of dying from any cause before the age of 65.
While there are factors in South Africa that increase the likelihood of earlier deaths on average, he says the US statistic is relevant for those of us who make a reasonable living and have adequate health care.
The four biggest dread diseases worldwide are cancer, heart attacks, strokes and the need for coronary artery bypass graft surgery.
According to Sanlam's statistics, the biggest cause of dread disease claims is cancer (45 percent in 2008), followed by the two heart conditions: coronary artery bypass graft surgery (22.5 percent) and heart attack (13 percent).
Twelve million new cases of cancer were diagnosed worldwide last year, according to a report issued ahead of World Cancer Day in February by health foundation and consultancy Axios International.
The report says in developing countries, cancer is now claiming more lives each year than Aids, tuberculosis or malaria.
Jurisich says Liberty Life's statistics show that at the age of 37, South African men have as great a likelihood of contracting a dread disease as they do of dying before contracting such a disease. For men older than 37, the likelihood of contracting a dread disease increases.
In the case of women, the likelihood of contracting a dread disease also increases with age, and - at older ages - similarly is greater than the chance of dying before contracing a dread disease.
Jurisich says the likelihood of women contracting cancer rises rapidly in middle age, and cancer is the main reason there is a much higher likelihood that a woman will contract a dread disease at a later age than there is that she will die before doing so.
He says smoking significantly increases the risk of both dread disease and death at all ages for both men and women.
Dr Marius Barnard, the brother of the man who performed the first heart transplant, Dr Christiaan Barnard, is regarded throughout the world as the founder of dread disease, severe illness or critical illness cover.
Barnard has said that "the outcome of a major health crisis is more likely to be survival than death but having survived, the cost of living is greater than the cost of dying".
Barnard, who is now in his 80s, told a gathering of healthcare actuaries a few years ago that insurance against the financial implications of needing long-term care but being unable to support yourself will, in the coming years, become the type of protection people, especially those of his age, need most.
Dr Pieter Coetzer, the chief medical adviser at Sanlam and the convener of the Association for Savings & Investment South Africa's medical and underwriting standing committee, says the prevalence of diseases will increase in future because people with genetic factors that predispose them to illnesses are surviving these illnesses and are producing offspring who may also become ill.
Despite the impact of modern lifestyles on the prevalence of diseases, Coetzer says the cost of dread disease cover is not increasing.
In fact, he says, market forces have led to the cost of this kind of insurance falling.
As a result of better diagnostic techniques, many dread diseases can be detected earlier, and, as a result, life assurers have refined their definitions of these illnesses.
For example, Coetzer says, you may suffer a minor heart attack that affects only a few heart cells and you may recover fully from it. A life assurance company may exclude such a heart attack and offer cover only for more severe attacks in order to reduce the premiums.
Jurisich says life companies' use of partial payouts at different severity levels has helped to contain costs, and assurers have adapted their margins to suit their markets.
Dread disease, severe illness or critical illness assurance is aimed at providing you with cover against the cost of surviving a dread disease.
If you contract a dread disease and have an income replacement policy, it will pay you out only while you are too ill to work. Similarly, a good medical scheme should cover the bulk of your medical costs.
However, the additional costs associated with suffering a dread disease will not be covered by either of these products.
Professor Stephen Jurisich, the director of actuarial studies at the University of the Witwatersrand, told a recent Liberty Life presentation focusing on risk that one of these additional costs could be the loss of potential income, because you may no longer be able to pursue your career, or you may lose the drive to continue your career path, or you can no longer work the same hours as you did before.
Other costs may arise from the need to adapt your home, in particular, expensive adaptations to your bathroom; the purchase of expensive equipment, such as wheelchairs or walking aids, to assist you; the adaptation of your vehicle; rehabilitative treatment; private nursing or alternative treatment not covered by your medical scheme; the cost of employing someone to care for children; a recuperative holiday; or taking early retirement.
Policies that offer dread disease cover are useful to insure stay-at-home mothers and people who do not work in the formal sector, Debbie Netto-Jonker, a financial planner and founder of Netto Financial Services, says.
If a stay-at-home mother becomes ill, dread disease cover can provide the cash to pay for additional support at home, she says.
Dr Pieter Coetzer, the chief medical adviser at Sanlam and the convener of the Association for Savings & Investment South Africa's medical and underwriting standing committee, says because you are not always totally disabled by a severe illness, your disability cover may not assist you, even if you have a newer policy that covers you for functional impairment (the proportion of your body's functionality that you have lost).
He says disability cover usually pays out only after you have been treated, your illness has stabilised and the impairment you have suffered can be assessed. You may eventually recover fully and not qualify for any disability cover, he adds.
Coetzer says although medical schemes should pay for your treatment for a severe illness, such as cancer, many schemes have limits on the amount they will pay, and there is usually a gap between what the scheme will pay and your actual medical costs.
Coetzer says dread disease cover can also be valuable to finance things such as a new business venture if you are refused credit because you are unable to provide insurance as collateral security.
You may be well enough to work after a dread disease, but you may not be insurable for between three and 10 years after such an illness.