Why you need an insurance advisor when thinking about trauma insurance cover

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Balance Advisors

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What is Trauma Insurance Cover?

Also known as crisis cover, or critical condition cover, it will pay a one-off lump sum if you are diagnosed with one of the life-threatening conditions as defined in your policy.

Not an easy subject to think about. Luckily, an insurance advisor can help unravel the threads of confusion.

What would happen if you were forced into taking time off work with a serious illness?

Would your family finances take a major nosedive?

Could you still afford the groceries every week?

How does it work?

When taking out trauma cover, you choose how much money you want to be paid out.

At Balance Advisors, we can help you with all the options, but we suggest asking yourself a few keys questions.

  • How many people depend on your income and what would happen if that income stopped suddenly?
  • Could you afford to pay off big debts such as your mortgage if you had no income?
  • How would you pay big medical bills that may crop up?

We work with several top insurance providers, who each have slight differences in their policy definitions. But they all cover a number of specific illnesses and conditions, including big ones such as heart attacks, strokes, or cancer.

Our insurance providers can provide cover on approximately 50 critical conditions, whereas some Bank insurance products, for example, will only cover about 10 – 20 specified conditions.

Trauma cover can come in two forms

  1. Standalone cover
  2. Accelerated cover

Most people aren’t aware of the differences and don’t understand which trauma cover is best for them, as it can affect both the cost and your claims.

There is also another term to throw in the mix here:

Buy-back or Reinstatement

So, let’s try to cover off what each one means and how it affects your policy.

Standalone Cover

This is as the name suggests – a benefit all on its own.

If you are diagnosed with one of the illnesses or conditions allowed and make a valid claim on your trauma cover, you will be paid out the lump sum without affecting your other insurances (including any other existing life insurance).

Accelerated Cover

This is the same product, but it is counted as PART OF your life insurance cover.

If you have your trauma claim accepted, the amount paid out to you will come off your life insurance.

This structure reduces the premiums for the accelerated cover compared with the standalone cover.

Something to consider, perhaps?

Can I get my trauma cover back if I make a claim?

Yes, you can choose to reinstate (buy-back) your trauma and/or life cover, even after getting a pay-out.

This means re-purchasing your trauma cover after you make a claim in case you need it again for a different illness or injury.

You must wait up to 12 months after the initial claim to do this, though.

If you have Accelerated Cover, you can also choose to buy-back the amount of life insurance cover that was reduced; again, 12 months after you claim.

Buy-back and reinstatement are both optional extras on your policy, so it is a good idea to talk to us about what you need, and how much it will cost.

Which trauma cover is right for me?

Each insurance provider will have their own policies, and these all vary slightly across the board.

It is the job of your insurance advisor to walk you through and explain what each difference means for you, and to help choose the best possible cover for your individual needs.

 Standalone trauma cover will give you more certainty over your life insurance, as well as an extra payout if you suffer from one of the specified conditions.

But, if you’re on a budget, accelerated cover can be a more affordable way to add trauma insurance cover to your overall insurance protection plan.

Remember, if you do go with accelerated cover and you make a claim, your life insurance cover will reduce so you’ll need to consider the impact of that in future financial plans.

Let your insurance advisor help

It’s clear that trauma cover should be something you consider.

But deciding which insurance provider to use, which type of trauma cover to go with, or which is the best policy for you is not as simple.

As your insurance advisor we will talk you through your situation, options, and worries, and be able to advise you on the best provider and policy to go for.

We do the hard work so you don’t have to!

Talk to Lee today on 09 394 2952 or email lee@balanceadvisors.co.nz

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While every care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments, or address your situation. Before making any decisions based on the information provided in this article, please use your discretion, and seek independent guidance.