be traced back hundreds of years, trauma
insurance is a comparatively new entrant
to the market. Trauma insurance was first
releasedin1983,thankstoaSouthAfrican
surgeon named Dr Marius Barnard. The first
policies were issued in Australia around
10 years later.
significant illness or accident. As he has
explained: "When I went into private practice
I could not help but notice that while many
patients eventually fully recovered medically,
they suffered severe financial problems.
This was not because of the cost of the
operation but because of the disruption
to their lives and their loss of income."
to be unlikely to work again, and income
protection pays if you are unable to work
either temporarily or permanently, trauma
payments require you to meet the definition
of one of a list of specified diseases and
injuries. It is not about the level or length of
the disability but is based on the diagnosis.
insurance', `critical illness insurance' or
`crisis recovery insurance'. Trauma insurance
can be complicated, with different policies
covering different conditions, each with
specific definitions.
coronary artery surgery. This list has since
expanded and some policies cover up to 40
conditions, including degenerative diseases
such as multiple sclerosis and Parkinson's
disease, paralysis, comas, loss of speech,
deafness, chronic organ failure, major organ
transplants, occupationally acquired HIV and
even severe rheumatoid arthritis.
level of impairment, working out the right
sum to be insured for is complicated.
For cancer, consider the fact that a claim may
be for a T2N0M0 melanoma or may be for
stage-three lung cancer. Trauma insurance
provides you with a one-off lump sum, which
means income and capital requirements
need to be considered. Deciding on the
right amount of cover for you will involve a
detailed discussion with your adviser around
two key areas what you will need at the
time of your illness/injury; and what you
want your life to look like afterwards.
income needs. As income protection only
coversyoufor75%ofyourincome,many
advisers will recommend that you top this up
to100%withtrauma.Whiletheperiodyou
allow for is up to you, a general rule of thumb
is to ensure you are covered for at least
two years.
the Senior Product
Technical Manager,
Life Insurance at
BT Financial.
In my previous life as
a financial adviser I
assisted a significant
number of doctors
in designing and
implementing their
insurance portfolio
sadly I have also
facilitated too many
claims on their behalf.
I urge you to read
this article carefully
and ensure you are
adequately protected
see page 59 for a list
of endorsed specialist
advisers who can help
with your insurance
review.