Life can take unexpected turns, and when a serious illness or injury strikes, it often brings significant financial challenges along with the physical and emotional burden. For many New Zealanders, trauma insurance (sometimes called critical illness insurance) offers a safety net during these challenging times. In this article, we explore why trauma insurance is worth considering, especially in the New Zealand context, and how it can help safeguard your financial wellbeing.
What is Trauma Insurance?
Trauma insurance provides a lump-sum payment if you're diagnosed with a specified serious illness or injury, such as cancer, heart attack, stroke, or severe burns. The payout is designed to support you during recovery, covering costs like medical treatments, rehabilitation, or even taking time off work to focus on your health. Unlike income protection insurance, which replaces a portion of your regular income, trauma insurance gives you a one-time payment to use at your discretion, which can be vital for covering out-of-pocket expenses not covered by New Zealand's public healthcare system.
Probabilities
Generally speaking, around 65% of Kiwis will suffer a Trauma medical event in their lifetime, and roughly half of those are cancers. More than 1 in 5 Kiwis will suffer a Trauma medical event before the age of 65. The likelihood of needing to claim on this type of policy increases with age, meaning it's essential to consider cover earlier in life.
The Rising Cost of Healthcare in New Zealand
New Zealand's public healthcare system generally covers essential services, but the reality is that some treatments, specialist consultations, and elective surgeries come with high costs or long wait times. For example, cancer treatments may involve private consultations, medications not funded by Pharmac, or alternative therapies. These can be expensive, potentially costing tens of thousands of dollars. In such cases, trauma insurance can help cover the gap between what the public system provides and the actual costs you might face, giving you peace of mind and quicker access to the care you need.
Financial Protection Beyond Medical Costs
While healthcare expenses are often the first concern when a serious illness arises, the financial impact of such events extends beyond medical bills. Everyday expenses like mortgage payments, utility bills, and even grocery costs don’t stop because you're unwell. If your illness prevents you from working, the strain on your household finances can be immense. Trauma insurance can alleviate some of that burden by providing a financial cushion that enables you to focus on recovery rather than worrying about how to make ends meet.
Who Should Consider Trauma Insurance?
Trauma insurance can be beneficial for anyone, but it’s especially valuable for:
Self-Employed Individuals: If you're self-employed or run a small business, you may not have sick leave entitlements or other employee benefits to fall back on if you're unable to work. Trauma insurance can fill that gap and help you maintain your lifestyle and business operations.
Primary Income Earners: If you’re the primary earner in your household, a serious illness could drastically impact your family’s financial stability. Trauma insurance provides a safety net, giving your family some security during a difficult time.
People with Dependants: If you have children, elderly parents, or others who depend on you, trauma insurance can ensure that their needs continue to be met even if you're unable to work.
How Trauma Insurance Fits into a Comprehensive Protection Plan
Trauma insurance is one piece of the puzzle when it comes to comprehensive personal risk management. In New Zealand, it's often used alongside other types of coverage, such as life insurance, income protection, and total and permanent disability insurance. While life insurance helps protect your family’s future in case of your death, trauma insurance provides living benefits – supporting you and your loved ones when you need it the most.
To better understand how trauma insurance fits into your personal protection strategy, you can start by exploring your options with Seek Cover's Personal Insurance.
Common Myths About Trauma Insurance
There are several misconceptions about trauma insurance that may deter people from considering it. Let’s dispel a few:
“I’m healthy, so I don’t need it.” While it’s great to be healthy, serious illnesses can strike anyone at any time. Even young and fit individuals can experience unexpected health issues.
“ACC will cover me.” While ACC (Accident Compensation Corporation) provides coverage for accidents, it does not cover illnesses. Trauma insurance addresses the financial impact of non-accident-related medical conditions.
“I can rely on savings.” While savings can certainly help, a serious illness can quickly deplete them. A trauma insurance payout offers additional protection and can be used in conjunction with savings for greater financial stability.
Tips for Choosing Trauma Insurance in New Zealand
Choosing the right trauma insurance policy involves understanding what conditions are covered, the payout amount, and any exclusions. Here are some tips for selecting a suitable policy:
Check the List of Covered Conditions: Each insurer covers different conditions, so make sure to compare policies to see which offers the most comprehensive coverage.
Consider the Waiting Periods: Some policies have waiting periods before benefits can be claimed. Make sure you understand any applicable waiting periods and how they could affect you.
Policy Structure: Look at whether the policy is a standalone trauma insurance or linked to another insurance type, such as life insurance. A linked policy may be cheaper, but a claim could reduce the coverage available on the associated policy.
Exploring different trauma insurance options is a crucial step towards finding a plan that meets your unique needs. To get started, Seek Cover's Get Started page provides helpful resources to guide you.
Trauma Insurance for a Secure Future
While no one likes to think about serious illness or injury, the reality is that planning ahead can make a huge difference. Trauma insurance provides a way to secure your financial future and maintain your lifestyle, even when faced with the unexpected. It’s a practical way to ensure that you and your family are protected, giving you one less thing to worry about in the event of a crisis.
The information in this article is general information only and is not intended as financial, medical, health, nutritional, tax, or other advice. It does not take into account any individual’s personal situation or needs. You should consider obtaining professional advice from a financial adviser and/or tax specialist, or medical or health practitioner, in relation to your own circumstances and before acting on this information.
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