Health insurance will help pay your medical bills for non-emergency health conditions. Life insurance protects your family if the worst happens. But what if you fall seriously ill? There are two types of trauma insurance, basic or hybrid. On the surface, both provide financial support if you’re diagnosed with an eligible serious illness or critical condition. But dig deeper into the fine print, and you’ll find they’re quite different long-term. It’s important to carefully evaluate the pros and cons of each option before you choose. We sat down with Yamini Agrawal, Head of Insurance at Global Finance, to get her expert insights.
What is trauma insurance?
Trauma insurance will pay your family a lump sum if you suffer from a serious illness or critical injury. This type of insurance usually covers over 45-50 conditions specified by your insurance provider – for example, a heart attack, cancer or stroke.
With trauma cover, you can cover your mortgage, replace lost income, and make any necessary lifestyle changes without worrying about missed repayments or how taking time off work will impact your finances. You can focus on treatment and recovery, knowing that your family is financially supported.
In New Zealand, there are usually two types of trauma cover insurance – basic and hybrid. While basic trauma insurance covers a predetermined amount and is the slightly cheaper option, Yamini warns that it comes with a few red flags.
“With basic trauma insurance, if you make a claim for an illness like cancer, you’ll need to wait 12 months before your cover is reinstated. It’s also likely that you won’t be covered for a similar condition again. So, if the cancer returns, you wouldn’t be eligible.”
Yamini also notes that basic trauma insurance may not last forever.
“If your cover is $100,000, you can only claim it a maximum of one or two times, depending on your provider.”
How hybrid trauma insurance provides long-term security
Hybrid trauma insurance provides more comprehensive coverage. It’s designed to replace lost income, so you’ll receive steady funds during your recovery.
Yamini says this type of coverage in New Zealand isn’t much more expensive than basic trauma insurance, but it comes with significant benefits. She says one of the main advantages is that you can make a claim multiple times, even for the same health issue depending on policy wording and eligibility.
“With hybrid trauma insurance, you can immediately reinstate it after making a claim and you’ll be covered for the same illness depending on policy wording and eligibility. And because the pricing is similar, it’s a major drawcard. We always want our clients to be covered for any previous health issues.”
In addition, Yamini says that hybrid trauma insurance will let you claim your full cover amount three to four times depending on policy wording and eligibility.
“People will often have serious illnesses multiple times throughout their later years. The option for more pay-outs can be a real lifesaver.”
Additional benefits of any trauma insurance
Without paying any extra premiums, here are some of the additional options you might add to your policy:
• Child trauma cover. Receive cover for your kids at no cost until they turn 21. Once they reach 21, they can continue the cover on their own policy without needing another assessment.
• Parents grieving benefit. Losing a child is a heartbreaking experience. This provides a lump sum of $5000 to $15000 towards everyday expenses during the grieving process.
• Special events increase. Increase your cover without undergoing medical underwriting for specific events. Events could include getting married or divorced, a new mortgage or a pay rise.
• Financial and legal advice. When you make a claim, the insurance provider may reimburse you for the cost of professional planning advice.
• Counselling. Be reimbursed for the cost of counselling with a psychiatrist or psychologist.
• Premium holiday. This option allows you to temporarily stop paying premiums for a specific period if you face financial constraints.
Why settle for less?
While basic trauma insurance is great, you could be left hanging when you need it most. Your health is your most important asset, and trauma coverage will give you and your family total peace of mind if a serious and unexpected illness strikes. While the cost of hybrid trauma insurance is slightly higher than its more basic counterpart, it’s worth the investment for many people – you get more coverage and long-term benefits. Either way, take the time to research your options and discuss them further with your insurance provider. Your future self will thank you!
Want to learn more about trauma coverage? Talk to the experts at Global Finance today.
The information and articles published are true and accurate to the best of the Global Finance Services Ltd knowledge. The information given in this article should not be substituted for personalised financial advice. Financial advice should always be sought independently which is personalised depending upon your needs , goals, and circumstances. No person or persons who rely directly or indirectly upon information contained in this article may hold Global Financial Services Ltd or its employees liable.