So how do you choose the best gap cover? 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…
Factors to consider when choosing the best gap cover
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 then either look at your current gap cover, or search for some products available. Let’s go through some of the more important criteria when selecting a gap cover.
Maximum rate. How much?
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 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.
Waiting period. How long?
“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 these products will likely only afford you a 200% shortfall payment. So you need to weigh up the cost versus the benefit.
For some people this might be appropriate for their anticipated risk of incurring medical costs. For others though, they’re after the peace of mind that all shortfalls will be covered. The premium is directly related to the cover, so the higher the cover, the higher the premium.
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.
Hereditary diseases and conditions may cause you to need particular cover and you should check the full policy to ensure you’ll get it.
So how do you choose the best gap cover?
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.
Compare all options and look at the premiums, the maximum cover, specific conditions or exclusions, waiting periods and any particular genetic condition you may have.
If in doubt, find an independent financial adviser to assist you. But be sure to ask all the questions on your mind and be upfront about what you are looking for.