The Critical Importance of Personal Insurance: Safeguarding Your Future

3 May

Adam Middlemis, a seasoned Financial Advisor and Insurance Specialist at Strategem has witnessed first-hand the transformative power of personal insurance. "In my time working as an insurance specialist, I have seen families survive financially, purely due to the fact they have had personal insurance in place," he reflects.

This statement underscores the vital role that trauma insurance plays, especially during life's most testing times. Trauma insurance is specifically designed to alleviate the financial burdens that arise from serious illnesses, providing a safety net when it is most needed.

The impact of a severe health diagnosis extends far beyond the physical and emotional challenges—it can disrupt a family's financial stability profoundly. Adam explains the reality for many families, "When battling a disease, such as cancer, there are so many additional costs for families including travel and accommodation expenses, all while one or two of the income earners are unable to work." It is during these times that trauma insurance proves indispensable, offering immediate financial support to cover these sudden expenses.

Adam also points out the common gap in people's understanding of their insurance needs, “There are a number of personal insurance options available to individuals. Often people know about life insurance and income protection, however trauma insurance and total and permanent disablement cover, are often new concepts.”

He emphasises the specific benefits of trauma insurance in cases of severe health issues, “In this particular case, of a cancer diagnosis, trauma protection allows immediate financial support regardless of whether or not the person is still able to work. This means their regular income may be able to cover the daily expenses including the mortgage repayments, but the insurance support would be able to help with the additional costs associated with the diagnosis such as treatments and travel.”

Understanding the full scope of trauma insurance is crucial, especially for those with significant responsibilities like mortgages and children. "Most of us don't like to think about the prospect of poor health, particularly at a young age. But when you have mortgages and children, knowing you would be financially supported in the event of illness, could make the world of difference," Adam adds. This insight highlights the importance of being proactive about securing trauma insurance—it’s not just a safety net, but a crucial component of responsible financial planning.

The Reality of Cancer in Australia

The stark reality of cancer’s prevalence in Australia is underscored by alarming statistics that highlight the urgency of preparing for the unexpected. According to the Cancer Council Australia, one in two Australian men and women will be diagnosed with cancer by the age of 85, painting a vivid picture of the widespread impact of this disease.

The Australian Bureau of Statistics (ABS) also reveals that in 2022, around one in fifty Australians were living with cancer. The data also shows a slight gender disparity, with males being more likely to have cancer than females—2.1% compared to 1.6%. This gender difference is crucial for financial planning, especially considering the traditional role of males as higher-income earners in many families.

These statistics not only highlight the commonality of cancer but also underscore the financial vulnerabilities that families might face when a primary earner is diagnosed. The financial implications of cancer extend beyond immediate medical costs, affecting the entire family's economic stability and necessitating a robust financial safety net. Understanding these statistics helps frame the critical importance of trauma insurance as a financial buffer that can provide peace of mind in the face of such high cancer prevalence rates.

Case Study #1: Melanie Smith's Fight Against Breast Cancer
At just 28 years old, Melanie Smith's life took an unexpected turn when she was diagnosed with an aggressive form of breast cancer, HER2-positive, necessitating a double mastectomy and extensive treatment. Living in Melbourne with her partner, the financial strain quickly mounted as Melanie faced a loss of income due to necessary time off work, additional living expenses due to relocating near her treatment centre, and overwhelming medical costs, totalling out-of-pocket expenses of $30,000. Despite being eligible for JobSeeker, the support was insufficient to cover her living expenses, illustrating the gaps that government assistance can leave during such critical times. Melanie could have been protected if she had income protection and particular Trauma Insurance in place, which would have offered a crucial financial safety net and alleviated much of the financial stress caused by her illness.

What is Trauma Insurance and what does it cover?

Trauma insurance, also known as critical illness insurance, is designed to provide a lump sum payment to policyholders who are diagnosed with specific illnesses or injuries that can have a severe impact on an individual’s lifestyle and income.

This type of insurance covers a range of serious conditions such as:

Cancer
Heart conditions
Major head injury
Stroke

The financial support it offers can be used for various purposes including covering medical treatments not provided by health insurance, paying for rehabilitation and special care needs, reducing debt, or compensating for lost income during recovery. The aim of trauma insurance is to ease the financial burden during a critical time, allowing the insured and their family to focus on recovery without the added stress of financial constraints.

Case Study #2: Matthew Clarke's Recovery from a Stroke
Matthew Clarke, a 36-year-old electrician and father of two, experienced a life-altering stroke. Thanks to his foresight in securing trauma insurance, recommended by his parents as he started his family, Matthew's financial situation was secure during his recovery. The trauma cover payout allowed his family to pay off their mortgage, cover all medical and rehabilitation expenses, and maintain their living standards, even as his wife took time off to care for him and their children.

Trauma insurance is more than just a financial tool; it is a lifeline during some of life's most challenging moments. Adam Middlemis notes that while many are aware of life insurance and income protection, trauma insurance remains underutilised, despite its significant benefits. It offers immediate financial support, allowing individuals to focus on recovery without the added burden of financial stress.

Don't wait until it's too late to consider the implications of serious health issues. Contact Strategem today to discuss how trauma insurance can protect you and your loved ones. Our team of dedicated advisors will ensure you have the right coverage to support you through life's most challenging times, allowing you to focus on what truly matters—your health and family.

Reach out now and secure your peace of mind for the future.

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If you need further advice on this topic, please do not hesitate to contact our office on (03) 5445 4777 and one of our Accountants will be available to support you.