As an accompaniment to life insurance, trauma cover is one of the most claimed insurances available and the majority of people would benefit from some level of cover. No I’m definitely not trying to sell everyone trauma cover – but statistically the odds are high that you would claim on that cover one day, if you had it.
What the policy does is list a range of conditions and illnesses that it will pay out on if you suffer one of them. The lists of covered conditions in my experience can range from as little as nine conditions listed up to 50 or more and tend to cover things like heart attacks, strokes and cancers to name just a few. Unlike life insurance, where the condition of claim is death, trauma policies are far more complex in nature so it’s vital to make sure you are dealing with a quality provider when seeking these. A cancer definition by one might not be the same as others and could mean you have early stage cancer with no payment coming. I’ve even seen policies where the heart attack condition requires 25 percent of the heart muscle to die for a claim to be paid and I’m no doctor but that’s got be a massive heart attack or a hard thing to measure 100 percent accurately. Others, by comparison, will pay out if a doctor says it was a heart attack. Period.
I even had a case recently where the client didn’t even know she’d had a heart attack. She knew she didn’t feel right after her walk so went to the doctor and it turned out she’d had a minor heart attack. Her insurer paid her $60,000 and I sure loved making the call to tell her that good news.
Working out how much cover you need is a little varied across professionals. Personally I’m not one for spending large amounts on insurances so I generally find about one year’s household income is adequate if you have medical cover and two years if you don’t.
My own policy also adds $50,000 for each of my children free of charge, which I feel is a great addition. We have a pretty decent medical system in NZ but these things definitely incur additional costs and finding you’re behind on the mortgage after one heart attack might just cause a second!
At the end, hopefully there is enough left for week in Rarotonga for the family to calm the spirits and finalise that recovery process.
DISCLAIMER: These are my opinions only and do not constitute advice in any way. Please contact a qualified financial adviser for advice specific to your situation.