Trauma Insurance for us all

Australians are suffering an increasing incidence of cancer and we are still experiencing high levels of heart disease and stroke. Due to advances in medical science, we have greater chances of surviving a serious medical condition. Whilst many people make some sort of medical recovery, the likelihood of making a financial recovery is less certain.

Figures show that there was a significant increase in relative survival after diagnosis of breast cancer (‘82- ‘86 to ‘98- ‘04) from 71% to 87%.  

Australians are known for their happy go lucky attitude or “It won’t happen to me” syndrome. If we look at the statistics relating to females we have the following wake up call. 

• 1/4 women will contract cancer before age 75 and 1/3 before 85

• 1/9 Australian women will develop breast cancer before 85.

• For a 40-year-old, the risk of having coronary heart disease at some time in the future is 1 in 3 for women

• There is a 1 in 4 chance of suffering a critical illness between 30 and 64

• 1 in 5 women over the age of 45 is at risk of having a stroke.

A fundamental part of any wealth plan is protecting your assets and family. Now more than ever there are fantastic affordable insurance options to cater to your needs and stop the above scenarios affecting not just your health but also your wealth.

Case Study

Client Name Max (35) and Sarah (34)
Status, married with 2 children, earning $60,000 income as an accountant. Max’s wife Sarah is currently at home looking after the two young children Billy (4) and Zac (2).
Max’s family has the following debts
Mortgage $140,000
Credit Cards $4,000
Car loan $6,000
Max also had $50,000 life insurance cover provided under his superannuation policy

Max was concerned about what would happen to the lifestyle of him and his family if he died or was to suffer an accident or illness that prevented him from working.

Max selected $1,000,000 life insurance and $200,000 Trauma and Total and Permanent Disability insurance cover in addition to the life insurance provided under his superannuation cover. This combination of insurance cover (under super and standalone insurance) would deal with all of the family debts and provide the family with $900,000 to live off should he die. If Max was to suffer a one of the medical conditions specified in his Trauma Insurance policy or suffer a total and permanent disability it may help meet the medical costs associated with the treatment of the condition without the need of having to dip into any personal savings or going further into debt.

Max also considered the need to provide life insurance cover for his wife Sarah. Although she was not working, she was making a valuable contribution to the running of the house and looking after the children. Max decided to cover her life for $500,000 so as to help towards providing external carers if Sarah was not around to look after the children. He included $400,000 trauma and total and permanent disability cover on her life.

Max was also concerned if he should suffer an illness that prevented him from working he also chose to protect his Income with income protection insurance up to the maximum possible 75% of the current income. Max’s employer provides for sick leave up to 3 months and without employment with his accountancy firm, Max had no other income to rely on. Max decided to choose $3,750 monthly benefit for his Income Protection cover (being 75% of his income, the maximum level of cover offered under Income Protection) with the benefits paid through to his 65th birthday. Despite his currently employer offering up to three months sick leave, Max thought that it was likely that he would be changing employers and knew that most companies offered just 4 weeks sick leave so he chose a 30 day waiting period. Max also chose to include an increasing claim benefit option on his Income Protection policy, which if he was on claim the monthly benefits would increase to help keep up with inflation.

Although Max assumed his income will increase over time he chose a level premium option. Level premiums are slightly more expensive than stepped premiums in the first few years of the policy, however over the term of the policy as the longer term savings of level premiums typically far outweighed the short term savings of stepped premiums.

Trauma Cover is the most valuable protection requirement for you to have in your Portfolio, given that there is a 25% chance of you suffering a Trauma during your lifetime.  If you would like to review your Risk Insurance Portfolio and in particular ensure that you have adequate Trauma Protection, please give me a call on (02) 8969-6970 or email me at gordon@taurusfinancial.com.au