eZine we delved into trauma insurance, and
in particular what to consider when working
out how much cover you need. Your adviser
can help guide that conversation, and once
you've settled on the amount of cover, the
next step is to decide on the structure.
cardiac conditions (such as having a heart
attack) or degenerative diseases, such as
multiple sclerosis, motor neurone disease or
Parkinson's disease. Policies may cover up
to 60 specified diseases, injuries and events.
If you are diagnosed with one of these
conditions and meet the definition used in
the policy, the full sum insured is payable
as a lump sum.
policies are called `Living Insurance',
`Crisis Recovery', `Critical Illness' or `Critical
Conditions'. In Australia, the maximum level
of cover you can generally purchase is $2
million. Policies can be indexed to inflation
and hence rise above this amount over time,
but if you're taking out a new policy, $2
million is the maximum available. There are
a couple of products in the market that will
provide sums insured above this level, but
entry is restricted and you'll need to speak
to your adviser to find out if they can
provide you with access.
TO CONSIDER
such as life insurance and total and
permanent disability (TPD) insurance can
be owned inside a superannuation fund,
trauma insurance is best owned directly.
In fact, from 1 July 2014 superannuation
funds will no longer be able to purchase new
trauma policies. When insurance is owned
inside super, a claim is payable to the fund
rather than to the individual. The individual
then needs to meet a `condition of release'
for the trustee to be able to release
those monies.
the age of 55, none of which are necessarily
present with a trauma-cover claim.
Therefore, if trauma was owned by a super
fund, you may find that a claim is payable but
the claim proceeds become trapped inside
the super environment.
super. Trauma can be purchased as a stand-
alone or linked policy. `Stand alone' means
that a claim on the policy will have no impact
on any other policies you may hold. So if you
had life insurance and/or TPD and suffered
a heart attack, resulting in a claim on your
trauma insurance, your life and/or TPD cover
would be unaffected.
the Senior Product
Technical Manager,
life Insurance at
BT Financial Group.