Australia is often identified as a nation that loves a punt – after all we are known to bet on flies going up a wall and having a horse race that stops the nation.  Therefore given our liking for things with probability involved – I often ask myself why do Australian’s overlook the personal insurance cover they are statistically most likely to claim on.  According to insurance industry numbers you’ve got a 33% chance of claiming on this type of cover prior to retirement.  Well let me try to explain.

Trauma Cover is the least well known type of personal insurance.  This probably comes from the fact that it is one type of personal cover that is generally not offered by Super Funds – therefore it often gets put in the “too hard to sell basket” by life insurance salesman.  However, it’s no surprise that this doesn’t reduce the importance and value that Trauma cover can provide you and your family.

Now before I drill into the nitty-gritty of trauma cover I thought a different way to look at insurance would involve you buying a block of land.  With the block of land you plan to build a house on it.  Now, unless you fancy yourself as a “Scottie Cam” type, I imagine the most exciting part of the whole process would be “moving in”.  But if I asked you what the most important part was of building the house – I’m tipping Scottie Cam and his Blockhead mates might say, laying strong foundations.  Because what would happen if we laid no foundations – well the house may not stay upright for very long.  So considering that context it is much easier to understand the importance of laying solid foundations for the long-term and recognise that although insurance is not the most exciting part it is a pre-requisite if we are going to make plans with our on-going income.

Looking at the numbers 50% of people do not get through to retirement age without experiencing an insurable event.  The statistics indicate that 1 in 3 people will suffer a health event that would covered by trauma insurance.  This makes trauma cover statistically the most likely you will make a claim on.   And if you are someone who values managing risk and playing with the odds in your favour – the numbers alone suggest it is a conversation worth having.

Trauma insurance provides an immediate one-off lump sum benefit and pays out on cause or diagnosis of a defined medical condition.  Generally speaking it pays a tax-free lump sum in the event of heart attack, cancer and stroke.  Policies can vary in terms of defined medical condition – so it is really important you get independent financial advice to ensure you have the most appropriate policy for your circumstances.

Important factors to consider when determining what level of cover is appropriate include;

• Replacing the income shortfall that your Income Protection does not cover
• Debt Retirement (in the event of an illness would you prefer to lose your house or lose your mortgage)
• Medical Costs - funds that can go towards treatment and rehabilitation costs.  For example, if the best surgeon/specialist for your condition is located interstate - the insurance proceeds can help make seeing them happen 

There are other important factors to consider about how Trauma fits alongside the other insurance cover but a good Certified Financial Planner® will be able to guide you through these issues.