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Critical Illness / Trauma Cover

We all get sick sometimes – that’s life. But some of us will experience serious illness.

The cost of recovering from a condition like cancer or heart attack can take its toll. Not just emotionally, but financially, too. How would you afford the cost of medical treatment? How would you cover your debts – including your mortgage – or be able to cope financially?

Do I need Critical Illness Cover?

The risks

  • In 2010, an estimated 114,000 new cases of cancer were diagnosed in Australia.
  • More than 60% of cancer patients will survive more than five years after diagnosis.
  • Two out of every three people that suffer a first time stroke will be alive one year later.
  • About 88% of stroke survivors live at home. Most of them live with a disability.
  • Stroke costs Australians an estimated $2.14 billion every year.

The reality

Australians are suffering an increasing incidence of cancer. In addition to this, we’re continuing to experience high levels of heart disease and stroke.

Advances in medical science mean we now have a greater chance of surviving these conditions. But treatment can be drawn out and expensive – while forcing patients to take months or even years off work.

Still, many Australians don’t take out insurance protection because of some common misconceptions that may apply:

“My private health insurance will cover me”

The average household cost of cancer is $47,000. And, while health insurance helps with medical treatments and hospital expenses, it does not cover some specialist therapies, ongoing treatment needs or the immediate care that is often required.

“It doesn’t matter; I’m not the main income earner”

Child care and home help provided by a ‘stay-at-home’ spouse could be worth more than $75,000 per year. In recognition of this, you don’t have to be working to take out Critical Illness Cover.

“I have Total and Permanent Disability (TPD) Cover”

Nowadays, serious illness doesn’t necessarily result in a total and permanent disability. Advancements in medical science mean that is it now possible for patients to recover their original lifestyles. Even so, the financial costs can still be significant – which is why Critical Illness Cover is vital.

What is Critical Illness Cover?

Critical Illness Cover pays an agreed lump sum benefit in the event of a listed serious illness. This money can help you survive financially while you focus on recovering and getting back to your everyday life.

What are the cover features?

Here are just some of the features you can expect with Critical Illness Cover:

  • Cover for major Illness events: Cancers, heart disease and stroke are all typically covered.
  • Choice of cover levels: You can choose between the Standard contract or a more superior contract.

The latter will provide cover for additional conditions. Some policies provide cover for 50 or so conditions.
What are the cover options?

Here are just some of the options you can expect with Critical Illness Cover:

  • Choice of premium options: ‘Stepped’ premiums increase each year in line with your age, while ‘Level’ premiums remain constant until age 65 (subject to insurer terms and conditions).
  • Standalone or ‘linked’: In the event of a claim, ‘standalone’ cover will not impact the level of any of your other covers. When ‘linked’, a Critical Illness claim payment will result in an equivalent reduction in the linked Life Cover (this is the more cost-effective option).
  • Comprehensive Child’s Critical Illness Cover: You can choose to insure your child. The level of cover depends in the insurer. In the event of a serious illness, this money could let you take time off work to care for your child.

What do the payments protect ?

A lump sum benefit could help you stay on top of debts, pay for medical bills and generally give you the means to maintain a reasonable standard of living while you’re recovering.

A lump sum payment will assist you in meeting the following expenses:

» Medical expenses and treatment costs
The cost of ongoing treatment, including prescriptions and perhaps alternate therapies, can quickly add up. The lump sum payment can be used to help cover these costs.

» Debt repayment

Following a serious illness, the last thing you want to think about is outstanding debts – like mortgage or credit card repayments. Critical Illness Cover helps ensure you will have the funds to cover these.

» Additional care and rehabilitation

Serious illness often presents the need for additional care or help around the house. Rehabilitation equipment or specialised therapies may also be required to help with your recovery. A lump sum benefit can help pay for these expenses.

» Lifestyle modifications

You may need to make a permanent lifestyle change, like reducing the number of hours you work. The lump sum payment can help offset the lower levels of income. Alternatively, it could allow you to take the time to ease back into working life.

» Cash reserve

Use your payment to create a cash reserve, which could later help boost your retirement savings or fund a family holiday.
The benefits of protection
In 2010 alone, $443 million of critical illness claims was paid from 12 Australian insurers in the market place. viii

Causes of claim

  • Cancer – 63%
  •  Musculoskeletal – 2%
  • Neurological Disorders – 2%
  • Heart Disease/Stroke – 29%
  • Other – 4%.

 

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i Cancer Council Australia (2011) Facts and Figures http://www.cancer.org.au/ Newsmedia/factsfigures.htm viewed 1 May 2012 ii Cancer Council Australia (2011) Facts and Figures http://www.cancer.org.au/aboutcancer/FactsFigures. htm viewed 22 May 2012 iii Stroke Foundation (2011) 10 Things You Should Know About Stroke http://www.strokefoundation.com.au/blog/?p=905 viewed 22 May 2012 iv National Stroke Foundation (2012) Facts, Figures and Statistics http://www.strokefoundation.com.au/facts-figures-and-stats viewed 1 May 2012 v Bupa Australia (2011) Key facts about stroke http://www.bupa.com.au/health-and-wellness/health-information/az-health-information/stroke#Effects viewed 1 May 2012 vi Cost of Cancer in NSW (April 2007) A report by Access Economics Pty Limited for The Cancer Council NSW vii IFS A (5 October 2005) Australian mothers – undervalued and underinsured, Media release, Sydney viii The figures shown represent actual claims paid by AMP, Asteron, AXA, BT, CommInsure, OnePath, Macquarie, MLC TAL & Zurich from 1 January 2010 to 31 December 2010.

 

General Advice Warning:

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 or you may make a decision that is not in your best interests.