No one really wants to think about being horribly unwell. But life doesn’t always go to plan.
Trauma insurance, or trauma cover as it is also known, is there to give you a financial cushion if you’re diagnosed with a major illness. It is a vital component of good financial planning yet often doesn’t receive the attention it deserves.
So, I recently sat down with Yamini Agrawal, Head of Insurance at Global Finance, to unpack:
- what trauma insurance actually is
- why it matters
- what is covers
- and how to make sure you pick the right policy.
What is trauma insurance?
Think of trauma insurance as a safety net. “It offers financial support so you’re not left scrambling to pay bills or rely on family and friends for help and you can prioritise you and your family’s health and well-being,” Yamini tells me.
Trauma insurance differs from life insurance in that life insurance pays out when you pass away. Trauma cover pays you while you’re alive, so you can focus on getting better. You can buy trauma cover as a standalone product or you can bundle it with other cover as part of a broader insurance package: combine it with life insurance, for example.
Trauma cover gives you options
Trauma insurance pays you a lump sum of money if you’re diagnosed with a serious illness like cancer, or have a heart attack, or a stroke. It is money to use however you want. You can cover your mortgage while you take time off work, pay for private medical care, take a break to focus on recovery or tick off items on the bucket list. You may use it so you or your partner can stop working in order to provide care or make any necessary modifications to your home. It’s entirely up to you.
If you get better after receiving the payout, you’re not expected to repay it. The payout is yours, regardless of your recovery.
Unlike income protection insurance, trauma cover isn’t linked to whether you can work or not. “It’s not about replacing income,” Yamini explains, “it’s about giving you options.”
In short, trauma insurance can help take the financial pressure off during a pretty overwhelming time.
Why trauma insurance matters in New Zealand?
In New Zealand, we’re lucky to have a public health system and ACC, but that doesn’t always mean fast access to treatment or all the support you might need during recovery. As Yamini reminded me, our health care system is facing some pretty big challenges.
Should you require it, private medical care can impose a substantial financial burden when you least need it. “Having trauma insurance can make a significant difference in managing the financial impact of a serious illness,” Yamini emphasises. Trauma insurance provides peace of mind.
Critical illnesses covered by trauma insurance
Cancers, heart-related conditions, and strokes are among the leading causes of serious health issues in Aotearoa. “These illnesses can mean months or even years away from work. Add in the rising medical costs, and the financial toll of recovery can be just as stressful as the illness itself.
Most trauma insurance policies in New Zealand typically include cover for around 50 conditions.
- Cancer
- Heart attack
- Stroke
- Major organ failure
- Coronary artery bypass surgery
- Multiple sclerosis
“Different insurers will vary slightly,” Yamini adds. “But these are generally the big ones across most policies.” Some less common but still serious conditions that may be included are:
- Paralysis
- Severe burns
- Loss of speech or hearing
Some policies go further and offer partial payouts for early-stage diagnoses or less severe conditions, which can be helpful for catching things early.
Choosing the right trauma insurance policy
Not all trauma insurance policies are created equal, so choosing the appropriate trauma insurance policy for your situation requires careful consideration. Yamini recommends looking beyond the premium costs and suggests also considering these key factors when comparing providers:
- The list of illnesses covered – This can vary between policies.
- What’s excluded – Some policies won’t pay out for certain types of illness, especially if they’re linked to pre-existing conditions.
- Payout flexibility – Some trauma policies also offer partial payouts for less severe conditions, while keeping your cover active for more serious conditions later.
- Basic vs hybrid – Basic trauma insurance is a more affordable option with limitations on repeat claims, while hybrid trauma insurance allows multiple claims, even for the same illness if it reoccurs.
- Maximum age – It varies between providers and policies
“Some people go for the cheapest premium,” Yamini notes, “but that can sometimes mean less comprehensive cover”. She went on to explain that hybrid trauma insurance allows you to claim your full coverage amount up to three to four times. This can be particularly valuable as people can experience the same serious illness multiple times. “Having the option for more payouts can literally be a life-changer”.
Don’t go it alone, get qualified advice
There are many different trauma insurance policies available through many insurance companies. Each one comes with its own particular set of policy triggers, exclusions, and options. Each one has their place, advantages and disadvantages.
Working with an insurance broker, like one of the specialists at Global Finance, can make a big difference. We can simplify the process and ensure that you choose a policy that provides the protection you need.
“A lot of people don’t know where to start,” says Yamini. “We work with these insurance companies every day, and we know the policies inside out, so our experience is valuable.
“We help by breaking down the options, explaining what the jargon actually means, and finding a policy that matches your situation. We can also help you get quotes and then we can help you apply, so it’s not too overwhelming. And all importantly, we can help you remember to include all the important details. Honesty is everything when it comes to trauma insurance.”
It’s smart to be prepared
Getting sick isn’t something anyone wants to plan for, but trauma insurance gives you one less thing to worry about during a crisis. Trauma cover gives you that breathing space: having the right support in place can make all the difference.
If you’re thinking about getting trauma insurance, or just want to understand your options, it’s easy. Just have a chat with one of the team at Global Finance and they’ll guide you through the process. Call 09 255 5500 or email us at insurance@globalfinance.co.nz.
*The information and articles published are true to the best of the Global Finance Services Ltd knowledge. Since the information provided in this blog is of general nature and is not intended to be personalized financial advice. We encourage you to seek Financial advice which is personalized depending on your needs, goals, and circumstances before making any financial decision. 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.