Most Kiwis are familiar with life insurance: an essential policy if you’ve got debts to pay and family who rely on you. But many don’t hold a trauma insurance policy despite the fact it’s often just as important as life cover.
This gap could leave thousands of Kiwis vulnerable – so what’s the story with trauma insurance and do you need it?
What is trauma insurance?
Trauma insurance, sometimes called critical illness insurance, pays a one-off lump sum to the policyholder in the event that they suffer a serious illness or injury. This type of insurance usually covers up to 50+ different illnesses and injuries including:
- Cancer
- Heart attack
- Stroke
- Loss of function and/or independence
- Brain injury
The idea is that the lump sum makes it easier to pay for your medical care and covers living costs until you’re able to get back to work. These costs might include your mortgage, rehabilitation, your family’s living costs and anything else that comes up as a result of your illness or injury.
Do I need trauma insurance?
You might not know, but Trauma Cover isn’t always just for “old” people. In fact, 68% of Trauma Cover claims were for 40 – 59 year olds* in 2023.
While Trauma cover isn’t for everyone, but you may want to consider Trauma Cover is you have:
- A family who depends on your income.
- Debt such as a mortgage or a personal loan to repay.
- Limited savings to cover living costs while you’re unable to work.
- Business overheads to cover.
Ask yourself – ‘if my income stopped all of a sudden and I had to cover a number of unexpected costs, would my family and I be able to cope?’ If you answered ‘No’ or I’m not sure’, then chances are you need trauma insurance.
How can I buy trauma insurance?
When buying trauma insurance, it’s a good idea to shop around for better value and to find a policy that suits your unique circumstances. When comparing policies consider:
- Premiums: how much does the policy cost and is it good value?
- Benefit level: how much does the policy payout? Insurers sometimes suggest $50,000 as a rule of thumb but you may need more or less depending on your income, debts and living expenses.
- Flexibility: circumstances change and your trauma insurance policy should change with them. Look for a trauma insurance policy that allows you to change your benefit amount due to life events like buying a home, having children or getting married.
- Waiting period: how long do you have to wait after taking out a policy to make a claim?
Buying trauma insurance is easy, but buying the right trauma insurance tailored to you? Not so much. Make sure you get it right and speak to an insurance advisor here at Properli before you buy.
* Chubb Life claims paid in 2023. Source: Advice Channel Insights
