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A financial safety net for a traumatic event or illness

  • Tuesday, August 01, 2017
  • Sandy Dunshea

If you suffered a critical illness or traumatic event such as a cancer or a heart attack, do you have a safety net in place to support you and your family financially while you recuperate?

With an estimated 134,000 new cases of cancer being diagnosed in Australia this year, and predictions that this number will rise to 150,000 by 2020,[1]  it’s important to plan to protect your financial wellbeing in case the unexpected should happen.

Trauma Insurance provides a lump sum payout if you are diagnosed, by a doctor, with a specified condition.

A trauma Insurance lump sum payment can be used to cover expenses associated with your illness such as out of pocket medical expenses, costs associated with therapy, special transport needs or modifications to your home required to assist with your recovery.

Who should consider Trauma Insurance?

Trauma Insurance has traditionally covered major medical trauma diagnoses such as stroke, heart attack, cancer and coronary artery surgery; however, many insurers now cover other traumatic illnesses and events, which can include major accidents resulting in paraplegia or quadriplegia, comas, loss of speech, deafness, chronic kidney failure, occupationally acquired HIV and in some cases Alzheimer’s disease.

Recent claim statistics across three insurers show cancer is generally the most claimed Trauma Insurance condition at 51 – 65%, while 20% of trauma claims relate to heart conditions including heart attack[2].

A number of factors should be considered when deciding upon Trauma Insurance, including family support available, other insurances in place including Income Protection or Total and Permanent Disability Insurance, Private Health Insurance inclusions and general levels of debt.

What about the fine print?

The costs associated with premiums for Trauma Insurance can vary widely depending on a number of factors, including but not limited to, the level of cover chosen and lifestyle considerations such as your age and whether you are a smoker.

The amount of cover you can choose will also depend on a number of factors, which could include your ability to cover debts, any lifestyle or accommodation modifications required and paying someone to assist at home during your recovery and a number of other considerations.

Generally, the more the policy covers, the more expensive the premiums. Premiums tend to rise as you get older, with policies lapsing once you reach a specified age (usually between 65 and 75).

Usually one claim on the policy will cause the policy to lapse, however there are exclusions to this rule.

In many instances Trauma Insurance lump sum payments are not taxed depending on certain conditions being met. Trauma Insurance should always be considered as part of an overall package of insurance protection which may include:

Life Insurance:  Life Insurance pays a lump sum in the event of your death.

Total and Permanent Disability Insurance:  Sometimes known as TPD Insurance, this cover pays out a lump sum in the event of certain medical conditions which render you with permanent and total disablement.

Income Protection Insurance: This type of insurance pays a claim payment, which is pre-determined (either by agreement or an agreed formula) upon a medical event or condition which prevents you from working, for a minimum time frame, until such time as you can return to work.

When it comes to understanding the complexity associated with personal insurances, we encourage you to seek professional advice so you can feel confident that you have appropriate levels of protection in place for your personal situation.

For more information about your personal insurance needs please contact Sandy Dunshea on (02) 6884 2222 or email admin@fortnumdubbo.com.au

1 http://www.cancer.org.au/about-cancer/what-is-cancer/facts-and-figures.html
2 https://www.lifeinsurancedirect.com.au/trauma-insurance/guides/claims-statistics/ (AMP, AIA, TAL Claim Statistics)

Sandy Dunshea is a financial adviser with Fortnum Dubbo. Fortnum Dubbo and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.  

The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only - unless otherwise stated. Fortnum Dubbo strongly suggests that you should not act on it without first obtaining professional advice specific to your circumstances.

This publication cannot be reproduced in any form without the express written consent of the author.

Fortnum Dubbo and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.

The information contained within this website does not consider your personal circumstances and is of a general nature only. You should not act on it without first obtaining professional financial advice specific to your circumstances. This website holds information for Australian Residents only.

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