Protecting your prosperity
Paying for trauma cover might seem like an avoidable expense, but it can prove vital to safeguarding your financial standing should the worst happen, says Lifetime financial adviser Nathaniel Byers.
OPINION: In my experience, trauma cover is the most important type of insurance second only to income cover to protect you and the assets you’ve worked hard to accumulate. Don’t ignore this insurance as a crucial part of your financial plan.
Trauma insurance pays out a cash lump sum should you be diagnosed with a critical illness or condition, and sadly the true benefits of the cover are often only understood when someone is diagnosed. During their lifetime, 33 percent of Kiwis will be diagnosed with heart disease,* while Kiwis affected by cancer is expected to rise by 50 percent by 2035**.
These statistics are sobering.
Many Kiwis are still unaware that, as well as the shock and concern that accompanies a serious illness diagnosis, enduring the condition can be financially crippling. Eligibility for ACC payments only applies in regard to health issues caused by an accidental injury, not for illness.
While health insurance ensures you receive the treatment you need, trauma cover provides cash flow should you be unable to earn an income, or need to pay for additional expenses such as hiring help for the day-to-day running of your household or paying for hospital travelling expenses.
Know what you’re covered for
Most trauma policies cover you for serious illnesses such as heart disease, strokes and cancer, and can insure you for up to 60 conditions. The range of conditions covered varies from plan to plan, so it’s important to understand your specific policy details and what it does and doesn’t cover. The best advice can be sought in conjunction with a financial adviser to compare policies to ensure you can get the cover you need.
What can I spend my pay-out on?
Over the years, I’ve seen trauma cover pay-outs used for many things:to cover debt such as car or home loans, to pay for travel to hospitals in other cities, to purchase specialised equipment and hire assistance around the house. You decide what pay-out amount you think you’ll need when taking out the policy and once the money is in your account, you can decide exactly how the funds are used.
Parents, don’t forget the kids
One of the smartest things parents can do is to cover your children with trauma insurance. On many adult policies, adding children to your plan comes at no extra cost to you. The cover is comprehensive and it can give you the freedom to stop working while you care for your kids during what is likely to be a stressful and uncertain time. If your children are in their early twenties, you’re likely to benefit from lower premiums and it will provide you with peace of mind knowing they’re taken care of.
Five trauma cover dos and don’ts:
- Do take out sufficient cover
- Don’t omit any relevant information on your application
- Do fully understand what you are covered for
- Don’t delay claiming within the required time
- Do lean on your financial adviser during the claim process
Nathaniel Byers is a Lifetime financial adviser based in Southland. He is passionate about providing financial peace of mind to families and professionals should unforeseen circumstances arise.
* The Heart Foundation of New Zealand
** The Cancer Society
My last article was written about teaching your ‘young’ kids about money and that was well received by our readers so I thought I would continue down the financial education path and focus on what we need to teach our ‘young adults’ about money.
I have always found having check lists helpful so hopefully this will help those young adults heading on their OE, graduating and leaving home and possibly also for the parents or grandparents who are helping coach these young New Zealanders from the side-lines.
It’s a nightmare trying to keep track of the different website logins; passwords that seem to be ever increasingly complicated; PIN numbers and security questions that you have no idea of the answers to; (no I don’t know the name of my favourite teacher!), it is not a surprise that many think technology is making things harder, not easier.