Keep premiums low, but not too low.
Trick headline! No financial product is THE best. Financial products can only ever be the right one for you and your circumstances. So let’s just get that straight. Anyone peddling “the best” anything related to personal finance is, at best, exaggerating.
If, on the other hand, you came to find out which GAP cover might be the right one for you and your set of personal circumstances, then read on.
From the beginning
Pretend you’re in school again for moment, and it’s homework time.
Rather, pretend that this is really important to both your health and financial security, and open the GAP cover table. Let us take you through some of the more important criteria when selecting a GAP cover.
Arguably the most important factor is the “maximum rate”. This is the rate at which the GAP cover pays the shortfall that you’ve incurred. Most of the GAP covers listed, will settle a shortfall of up to 500%, meaning that if the medical specialist invoiced you for R5, 000 and your medical aid paid R1, 000, then the R4, 000 would be settled.
We say that this feature is critical, as it embodies what a GAP cover is all about – settling your medical bill shortfalls. If your whole rationale for taking out GAP cover is to protect yourself from paying personal-finance-destroying medical bills, then you want insurance against that; and you want a lot.
Some GAP covers only provide 100% or 200% shortfall cover. However medical specialists who only charge you 2 or 3 times medical aid rates are a rare breed, and you’re more likely to be charged a much higher multiple. Therefore, make sure that the GAP cover you choose covers shortfalls that likely match the kind of shortfalls you want to insure yourself against.
What if the gap becomes a hole?
The burning question on most people’s minds, is “Can I ever run out of Gap cover?” The answer to that is technically yes, but we think it unlikely that anybody actually ever has. “Specialist shortfall” shows just how much the GAP cover provider will pay out. This amount will change going forward based on the changes to the industry which we have written about here. Read that article and rest assured that you’d be very unlikely (and unlucky), to ever be touching that void.
“Waiting periods” is the clause that makes most people’s fists itch. All GAP covers have them for obvious reasons. If your uneasy visit to the cardiologist results in the need for a heart transplant, no insurance company wants you to join the next day and suddenly be covering a very expensive procedure. Each GAP cover provider will implement waiting periods for all joiners, but these generally relate to pre-existing conditions – pregnancy included. Read their fine print and make an informed decision.
We can give you comfort by saying that what GAP cover is fundamentally designed to do – insure you against unforeseen medical costs, is NOT held up by these waiting periods. If you had to end up in hospital for unforeseen circumstances, and not because of any prior condition, then those costs would not be carved out by virtue of the waiting periods.
Keep premiums low, but not too low.
“Premiums”. We did stress that the cost alone should not bear much weighting on your decision, but it would be irresponsible to not question what it is that you’ll be paying every month. On the matter of cost, there are GAP covers out there that will cost you as little as R150 per month, but as we emphasized in the beginning of this article, these products will likely only afford you a 200% shortfall payment.
For some people this might be appropriate for their anticipated risk of incurring medical costs. For this writer however, I personally would like to know that I won’t be left marginally destitute should a material medical disaster come my way – for which I am happily prepared to pay more in GAP cover premiums.
Consider your genetics and family history.
There are a host of other criteria against which GAP covers should be considered, including more niche measures like oncology, casualty (ending up in the ER), dental, and emergency benefits. All should be considered if you feel any of those hold particular importance for you. Remember that personal financial planning is a personal thing.
Gap cover is a vital part of your insurance, and it deserves a little study. There is no best option, but somewhere in there is the best option for you.