Last week saw the passing of Dr Marius Barnard, who along with his brother Christiaan, was one of the pioneers of open heart surgery. As well as this incredible claim to fame, he was also responsible for the development of personal Insurance payable on the diagnosis of a traumatic event. This type of insurance, known as Critical Illness, Living Assurance or Trauma cover was developed as he saw that there was a need for a product that would provide some financial comfort while patients were recovering from major heart surgery.
This product which was first launched in South Africa in 1983, soon became popular the world over and is payable as a lump sum on diagnosis of a traumatic medical condition. The most common claims are for cancers which account for around 68% of claims, heart attacks and strokes or neurological conditions. Around 1 in 5 males and 1 in 7 females over the age of 30 will suffer a traumatic medical condition before the age of 65, and often the cost associated with recovery is more than most budgets are able to manage. With advances in medical technology the likelihood of surviving a critical illness has improved greatly and many people, who would have died previously, now survive and have to face a struggle to meet costs.
The negative impact of this tale of increased survival rates is that those without the right type of insurance cover in place can end up being crippled financially, or worse, finding themselves in a position where they need to get back to work in a hurry to keep bringing in the household income, and ending up not making a full recovery and suffering a relapse of the original illness. By having some form of trauma cover in place, a lump sum of funds will be available when you need it. This sum can be used for any purpose. For some it can mean the clearance of debt to eliminate the stress of where payments are going to come from during the recovery period. It could be used to fast track alternative treatment methods without having to find the money elsewhere, or may even be used to pay for a holiday for the whole family to help with recuperation.
However, not all Trauma or critical illness policies are the same. Some will cover a wider range of medical conditions while some may only cover the main contenders. There will also be a large variance in premium costs between providers and it is therefore important that you look at your options from a number of different providers. This hunting around can be done by a registered adviser who should also be able to provide you with an explanation of differences between the different covers available, saving you valuable time and money in the process. There may also be variations in additional features available from the differing insurers offering the product.
One insurer has even developed a product where you can receive a portion of the claim payment based on the severity of the traumatic condition suffered and unlike most products which are cancelled after a claim until you have had a clean bill of health for a number of years, the Progressive Care cover will allow you to claim for a different traumatic condition as long as it’s not related to the initial problem.
The level and type of cover you will require will depend on your current position and whatever is important for you to protect, so a free assessment with your registered insurance adviser to develop a plan is a great place to start. To finish off, we’ll leave the last word with the argument put forward by the late Dr Barnard, who stated that,
“as a medical doctor, I can repair a man physically, but only insurers can repair a patient's finances”.
