As we sat there, waiting in anticipation, the Doctor asked “so tell me, what do you know about your reason for being here
today?”
My husband responded with “Well, nothing except given I am sitting across from a haematologist I assume I have cancer.”
His response confirmed our fear. “Yes, well based on what we know you have a 90% chance of having cancer. We’ll need
to run some tests to work out which cancer you have. It’s likely Non-Hodgkin’s vs Hodgkin’s which is what Delta Goodrem
had.”
As we walked out of the appointment, one of my first thoughts after getting over the initial shock of what we had just
been told was we are going to be ok. Financially, we didn’t have to worry as we have the appropriate insurances in place,
having just reviewed these 12 months earlier.
My next thought was, what about all those other people who are in a similar situation and who don’t have personal
insurance cover. What are they going to do and how are they going to survive this journey financially, let alone the
physical and emotional aspect of having/living and supporting someone who has cancer.
This isn’t what I would call an irregular occurrence. If I look around me I have a relative who has just completed round 40
of chemotherapy for bowel cancer and is only 34 years of age. She is fortunate enough to have Income Protection to
support her during this process financially. We also have a friend who was last year diagnosed with bowel cancer, he too
has Income Protection and so financially they didn’t have to worry.
I’ve worked with many clients over the years in my previous role as a Financial Adviser and where appropriate I always
discussed the importance of having personal insurance cover in place for situations just like this.
To summarise, there are four different types of personal insurance cover that you can have. These include:
Life cover also known as term life insurance or death cover
Pays out a lump sum payment in the event of death. It may also pay out on diagnosis of a terminal illness with a limited
lifespan usually 12-24 month period, pending terms of the policy.
Income Protection
Pays up to 85% of your pre-tax income for a defined period of time if you are unable to work due to partial or total
disability. Waiting periods apply with most ranging from 14 days to 2 years. The benefit period is how the long the
payments will be made. Most policies offer a 2 year, 5 year and up to a defined age (65 or 70). Of note, APRA is currently
introducing changes to remove the defined period which means policies will only be payable for a maximum of 5 years.
They are also looking to amend the benefit details so that they will be capped at 90% of earnings at time of claim for the
initial 6 months and then reduce this to 70% of earnings for the remainder of the claim.
Total and Permanent Disability cover
Pays out a lump sum amount in the event you are permanently and totally disabled as a result of illness or injury. There
are two different definitions, with the default being “any” occupation:
- Your own occupation – you’re unable to return to return to your role you were working in prior to the disability. E.g.
surgeon who as a result of the disability could never operate again. - Any occupation – you’re unable to return to any job that is suited to your education, training and experience.
Trauma cover also known as critical illness cover or recovery insurance
Pays out a lump sum amount in the event of suffering a critical illness or serious injury such as heart attack, stroke, major
head injury and cancer. A couple of years back, a friend of mind suffered a heart attack and unfortunately as a result of
this, whilst they had Income Protection, they didn’t have Trauma cover. To this day they are still suffering the financial
consequences of the medical costs which may otherwise have been covered if an appropriate Trauma cover policy was in
place.
Whilst all are important, I believe Life and Income Protection are key. Why? If you have debt or financial commitments
(ongoing living expenses, education/childcare costs, legal costs, medical costs), Life cover can provide a lump sum
payment to clear this should you pass away or be diagnosed with a terminal illness. This can mean the difference between
leaving your family in a complete financial mess vs having no debt and some money to help transition after you’re gone.
As a result, this could allow the remaining spouse to take time off work or reduce hours to care for children, whilst also
having funds to take them on a holiday to assist with coping with the grief.
With Income Protection, this can help reduce the financial burden of meeting household and medical costs by assisting
with replacing a portion of your income you may no longer be earning. Whilst your spouse may be able to contribute to
household income, something to keep in mind is are you going to need them to take time off to assist with your care?
Whilst the above is not a comprehensive overview it is intended to start the conversation around having personal
protection in place. Having experienced this first hand with clients over the years, having the certainty of protection in
what is an uncertain time is definitely a key contributor in the healing process. Removing or reducing Financial stress is
one less thing you need to be focussing on, allowing you to redirect your energy to the physical and emotional recovery.