Trauma or Critical illness insurance enables you to be paid a lump sum amount of money on diagnosis of a critical illness (such as cancer, heart condition, stroke, major burns and up to 20 other conditions) whether you are working or not.
Other well-known conditions include multiple sclerosis, muscular dystrophy, quadriplegia and blindness.
It can be used to pay for treatments or medicines that aren’t covered through the Pharmaceutical Benefits Scheme (PBS) and therefore may not be covered through your private health insurance. It may also be used to cover other expenses such as child care, cleaning, or paying debts thus allowing you to focus on your recovery.
Why do you need it?
Many patients are surprised to learn that they could be paying thousands of dollars on treatments even by having the highest level of private health cover.
Unfortunately, this is an all too common occurrence, but having this extra coverage will ensure you don’t end up with financial difficulties.
Trauma insurance is not a replacement for income protection or private health insurance. It’s designed to help pay off debts, the costs of rehabilitation &/or childcare.
Did you know:
What is it used for?
Do your other insurances cover this?
The simple answer is – unlikely! Why?
Nicholas is married to Rebecca, who is taking time out of the workforce to look after their twin three-year-old boys.
Nicholas is employed and has already arranged a comprehensive package of insurances for him. However, they hadn’t recognised the importance of insuring Rebecca and the financial impact of this oversight hit home when she was diagnosed with breast cancer.
During the three years it took Rebecca to make a full recovery, they spent a total of $92,400 on childcare and help around the home. Also, things were particularly tough in the first two years, where these costs amounted to $38,400 pa. This represents a little over 50% of Nicholas’s take-home pay, leaving him with little money to pay the mortgage and meet their day-to-day living expenses.
The financial impact of Rebecca’s critical illness could have been reduced (or eliminated) if, after speaking to a financial adviser, she had taken out Critical Illness insurance to cover these and other costs. (MLC Smart Strategies, 2013/14)
If you would like to review your insurance needs, please contact Sofie Korac on (02) 8252-3207 or email email@example.com to arrange a confidential, free consultation.
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Information contained within the above article is of a general nature only and is provided exclusively for the clients of GEM Financial Planning. Individuals should not act upon any such information without prior consultation with a qualified financial adviser to ensure that any action meets their personal financial needs, situation and objectives. No responsibility is accepted by GEM Advisers Pty Ltd or their representatives for those persons acting on information contained herein and persons do so at their own risk.
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