Illness or injury

Cancer. Strokes. Heart attacks. Ordeals that most of us would prefer not to have to face.

It’s tempting to think that ‘It couldn’t happen to me’ and therefore treat protection against these traumas as a luxury. After all, no one wants to find themselves in a situation where they have to make a claim.

But the unfortunate reality is we are more likely to be confronted by one of these traumas than we would like to think.

What's the likelihood of suffering a traumatic illness or injury?
How can I protect against the risk of illness or injury?

What happens if I'm out of action and unable to work?
How much trauma cover do I need?

What’s the likelihood of suffering a traumatic illness or injury?
When we are enjoying good health it’s easy to think that we are invulnerable and hard to imagine being incapacitated. But the chances of suffering an illness or injury are greater than you might think.

20,000 – Australian men diagnosed with prostate cancer every year.¹
16,700 – Australian men who will survive a bout of prostate cancer every year.²
60,000 – Australians who suffered a stroke during 2009.³
115,400 – Australians who will contract cancer in 2011.
One in two – Australian men who will contract some form of cancer before they turn 85.⁴
One in three – Australian women who will contract some form of cancer before they turn 85.⁵
20% – Proportion of stroke victims aged under 55.⁶
3.7 million – Australians whose lives are affected by cardiovascular disease.⁷
60% – Proportion of cancer patients who survive for more than five years after diagnosis.⁸

Cancer is the most common cause of death for females aged 25-44 years and for males and females aged 45-64 years. While many cancers are treatable, dealing with cancer can be physically and emotionally difficult.

Coping with cancer can also carry significant financial costs such as medical costs for cancer patients which can be high. You may need to reduce your paid working hours or resigning altogether to focus on recovery. In some cases, you may not be able to return to your normal course of work for some time after initial diagnosis.

With improvements in modern medicine, many people who suffer from cancer can now survive. A cancer condition that leaves you with a disability that stops you from working temporarily can be financially devastating.

Trauma insurance is particularly beneficial in such circumstances, as it pays a lump sum if you suffer from a condition that is covered by the policy.

What happens if I’m out of action and unable to work?
Your ability to earn an income is likely to be your biggest asset in life. A 30-year-old person earning an average wage of $60,000 could earn over $2 million by the time they reach 65. Insuring your income can give you peace of mind and let you rest assured your family and lifestyle will be protected.

Physical injuries can seriously inhibit your ability to earn an income and can be a serious impediment to your financial future. While workers’ compensation can protect you financially for injuries suffered at work, those that occur outside of work are not covered.

If you are unable to work due to illness or injury, income protection insurance can provide you with up to 75 per cent replacement income, until you are able to return to work.

Your income protection premiums are tax deductible, reducing the overall cost of your insurance.

How can I protect against the risk of illness or injury?
Trauma insurance provides a vital safety net for those times in your life when you need assistance following an illness or injury.

A comprehensive trauma plan covers a defined list of events, including cancer, heart attack and stroke. In the event of a claim, the plan will pay out a lump sum for whatever purpose you see fit, such as:

reducing your debts
paying off your mortgage
seeking specialist medical treatment
refitting your home as part of your rehabilitation
funding lifestyle changes, such as reducing your working hours.

The last thing you need after suffering a major illness or injury is to feel pressurised into rushing back to work too early, potentially jeopardising your recovery.

Once you have paid off your debts, you can invest the remainder of the trauma payout to provide you and your family with an ongoing income while you recover, reducing any financial stress.

Trauma insurance can come in many forms, from a standalone trauma plan to an option in conjunction with life or income protection cover.

How much trauma cover do I need?
An experienced financial adviser can help you navigate your way through the fine detail and determine your optimal level of trauma cover.

Your adviser will help you answer the hard questions.

Do you want an income supplement to allow your spouse to give up work to look after you?
How will your family earn a regular income?
How will you pay bills and other expenses?
Would you like to pay off your mortgage and other loans?
Will you need to travel for medical treatment?
Will you need to renovate your home, upgrade your vehicle or modify your car so you can drive?
How will you fund retraining for alternative employment?
How will you fund specialist equipment for post-trauma recovery?

1.http://www.prostate.org.au/articleLive/ Prostate Cancer Foundation of Australia
2.http://www.prostate.org.au/articleLive/ Prostate Cancer Foundation of Australia
3.AG Thrift (personal communication). Estimates obtained using NEMESIS data (assuming no change in incidence), and Australian Bureau of Statistics estimates of a changing population via National Stroke Foundation http://www.strokefoundation.com.au/facts-figures-and-stats
4. Cancer in Australia: an overview 2008 (Australian Institute of Health & Welfare) and Australian Cancer Research Foundation
5.Cancer in Australia: an overview 2008 (Australian Institute of Health & Welfare) and Australian Cancer Research Foundation
6. AIHW: Heart, stroke and vascular diseases, Australian Facts 2004 via National Stroke Foundation http://www.strokefoundation.com.au/facts-figures-and-stats
7.Heart foundation (www.heartfoundation.org.au)
8. http://www.cancer.org.au/aboutcancer/FAQ.htm#3011 Cancer Council Australia