Trauma Cover – The Jewel in the Personal Protection Crown
The miracle insurance product - but only 3% of us have it
I often describe trauma cover (aka critical illness, crisis cover & recovery money) as the miracle product from cradle to grave, and yet its market penetration in Australia today is negligible – less than 3% of the population own trauma cover.
My mission is to motivate clients to want two things:-
- To want as much trauma cover as they can reasonably afford
- To want to own it for as long as possible.
Let’s have a look at how these two objectives can be achieved:-
Q: “How many people buy personal protection products because they expect to claim?”
A: “None” People buy them “just in case.”
Let’s look at this in a new way. With the advent of trauma cover, people should be buying because they expect to claim.
A General Reinsurance Life Australia Ltd study showed that a 30 year old male in Australia had a 68% likelihood of suffering a “trauma” by the age of 70. By taking out trauma cover, he would be insuring against a probability not a possibility.
However, the likelihood of a claim is only half the story – what about the likelihood of recovery?
In 1990, (and how many medical advances have there been since then?), a large medical study carried out in the USA showed a 70% survival rate from cancer, heart attack and stroke. What would that have increased to by now?
Trauma cover is different from other forms of cover – you are more likely to claim the longer you have it, and you are also more likely to be around to benefit from it. In the world of insurance, this becomes an irresistible combination.
But the key is owning it for as long as possible. The tragedy of trauma cover in this country is that probably close to 90% of it is owned by people aged between 35 and 50. Very little trauma cover is owned prior to age 35 (therefore excluding the majority of car accident victims) or over age 50 (excluding the majority of people who suffer cancer, heart attacks and strokes).
It is typically at the very time that the insured person is reaching the age where they are more at risk of cancer, heart attack or stroke that he or she has to give it away because it has become unaffordable.
A few years ago, I discovered that 25% of the working population in the UK owned trauma cover - this compared with 2.5% here in Australia! I also discovered that there is no such thing as a “stepped” premium in the UK, i.e. one that is guaranteed to increase every year because of your age. There is only a “level” premium in the UK - one that is guaranteed to stay the same all the way to age 65.
This was my “light bulb moment” – I suddenly realised: “Of course 25% of the working population in the UK own trauma cover, because all of the people who bought trauma cover in their 30s and 40s have still got it in their 50s and 60s because they are still paying the same amount of money for it!”
The moral of this story is to always try and buy as much trauma cover as you can on a level premium, Many of you being migrants to Australia would have opted for Trauma Cover with Stepped premiums at the time you took out the cover as affordability was an issue and it was important to obtain as much cover as possible for the lowest Dollar value. Now may be the opportunity for us to review your existing cover and look to convert all or part of you cover to Level premiums.
Finally, a note on the “cradle to grave” aspect of Trauma Cover. It is a unique type of cover in that it legitimately targets any individual of any age, as the wide range of medical conditions covered tend to apply to varying degrees at different age points, as follows:-
AGE BAND |
TARGETED TRAUMAS |
0 - 18 |
Child related illnesses/injuries |
18 - 25 |
Accident related injuries (paralysis, coma, major head trauma, Severe burns, loss of limbs – i.e car accidents |
25 - 35 |
Accident related injuries (see above), cancer (females – breast cancer), Multiple Sclerosis (average age of diagnosis in Australia is 31), Motor Neurone Disease & Muscular Dystrophy |
35 - 50 |
All traumas |
50+ |
Lifestyle Diseases – cancer, heart attack & stroke |
Gordon Hatch
Authorised Representative Number 244893 of
SECURITOR Financial Group AFSL #240687
Taurus Financial Services Pty Ltd
Level 6, 2 Help Street Chatswood NSW 2067
Tel: + 61 2 9411-4161
Fax: + 61 2 9412-1518
Email: gordon@taurusfinancial.com.au
Web: www.taurusfinancial.com.au