The majority of our clients with young families or mortgages would understand the need for, and be relatively familiar with how Life Insurance and Income Protection policies work.

However, we also find that Trauma cover (known by some insurers as Crisis cover) is not well understood, leading to clients not being adequately covered in this area.

Trauma Cover can work best to complement an existing Income Protection, which will replace a portion of current income if a client becomes unable to work due to illness or injury. However, these payments will generally be used to maintain the household expenses that will obviously continue.

Trauma Cover, on the other hand, will pay an agreed lump sum benefit (on top of any Income Protection), to the insured person, should they be diagnosed with a condition specified in the policy, with cancer, a heart attack or strokes being the most common illnesses.

This is designed to assist with the additional expenses likely to arise out of a serious illness, which can include medical costs, necessary home renovations or having to move to a more suitable home. A well designed strategy will take the financial stress out of the situation, to ensure the client only has to concentrate on their recovery.

One of the major differences between Trauma and other types of disability cover, is that a payout is determined by diagnosis of a specified condition – not the client’s ability to work – which is why Trauma cover can be attractive for clients that are currently not in the workforce, as it can still provide a family peace-of-mind, when Income Protection may not be available due to not working.

To assess your personal insurance strategy, to ensure you and your family are adequately protected, contact your Financial Planner for a review of your circumstances.