Trauma & Critical Illness protection - the easy stuff
Going into this I knew it would be a complicated post to write. Then I googled Trauma Insurance to gauge what information is available and what isn’t. Filling those blanks is what I really hope to achieve with this blog.
The first article that popped up was “Consumers still confused by trauma policies”. I’m not surprised, though it is at a glance not too difficult to explain:
“In a nutshell you receive a lump sum payment that is normally used to cover additional costs and/or to replace income because of a serious and critical health event.”
But for every follow up question you are thinking of I can almost guarantee my answer would be “it depends”.
The problem here is what is covered by your Critical Illness policy (the more accurate and thankfully now the more commonly used term). It can vary depending on the provider and the product. The benefit you receive may also depend on the type and severity of the ailment you suffer from.
I’m afraid this isn’t one of those blogs where I can tie this topic into one neat little bow, however, these products are very valuable.
A major health issue is very common during a New Zealanders lifetime and they take a toll on your time and money. But Critical Illness cover can assist with both the increased costs related to illness and replacing short-term income lost.
The majority of Income Protection policies I have sold have been under a 13 week waiting period. This means someone is unable to work for at least 13 weeks before the cover kicks in (generally because it saves approx 50% in premiums) and we match this with Critical Illness cover which can be paid in the short-term.
The theory being that if you are unable to work for more than 13 weeks and you have not been involved in an accident (i.e. eligible for ACC benefits) you have likely suffered a critical illness. That means that this lump sum benefit will cover your expenses in the short-medium term and if you are unable to work for an extended period of time you are able to access your income protection.
When you think about these types of products you need to consider the scenario. If you or your partner suffered a heart attack, cancer stroke etc. how would you manage financially to get the best possible health outcomes. That may include not just replacing the income so you can pay the bills (Income Protection can provide a monthly benefit after a waiting period) but would it be best for your partner to take time off as well to help you during your recovery? What other costs will pop because of these events? Would further assistance with childcare help?
Have a plan and figure out how you would finance it with this product and any personal risk product. That is the key.
