Trauma Cover - what is it?
Wednesday, 9 December 2009
Most people would agree that heart surgeons seem to make more than the average wage. One may argue that unique and highly specialised skills should be well rewarded. However it seems that they have also thought about protecting it - and keeping wealth is an essential part of financial planning.
Few people realise that the famous South African surgeon, Dr Marius Barnard, pioneered more than just new techniques and knowledge in his field. He also developed a way to help people secure their financial futures when a critical illness occurred. A critical illness is one of those major life-changing illnesses that affect everything, but don’t necessarily lead to an early demise, like heart attacks, strokes, cancer, and multiple sclerosis. They are traumatic events, and they are a danger in more ways than one.
Dr Barnard recognised that one of the key principles that influenced recovery rates of patients was the removal of stress in other areas. In 1983 the first “Trauma Insurance” product was developed by him. The theory is, like many good things, quite simple. Many people initially survive a critical illness because of the skill of medical personnel and treatments today. How well they survive and how quickly they recover can sometimes depend on other stressful factors. Financial loss is one thing that can create added stress. Therefore if you can remove this stress, the theory is that patients will improve their chances of survival. The result was Trauma Cover insurance, designed to pay a lump sum to a victim who suffers a critical illness. From a personal health and wellbeing point of view it is well worth considering.
This is not to say that all insurance is worth considering, as not all risks in life need insuring against. For instance, a couple of years ago in America there was quite a run on “Alien Abduction Insurance” policies. Apparently you could get $1,000,000 paid to you if you had been abducted by an alien (and returned presumably) and could provide proof of the abduction. I’m not sure what the premiums were, but if it cost more than an Instant Lottery ticket it was not worth it at a guess. You can’t believe everything you hear, and this may be in that category, because I didn’t read of a successful claim. But perhaps that’s not suprising really.
Some risks should be retained, some avoided, some transferred. Alien abduction is a risk that could be retained for instance. The peril of going out to sea in a leaking boat without safety equipment however should be avoided. Major financial catastrophes should be transferred and you can insure against them at a known cost. These decisions are made on the basis of their chances of occurring, and the financial impact if they did.
There is an abundance of statistics and information supporting the argument that the chances of suffering a critical illness, and living through it, are significant. It is a foreseeable risk that can have a major impact on your financial planning as well as your health. It would seem to be an area where we should consider taking the good doctors advice.
Speak to your InsuranceNet adviser for more information on Trauma Cover.
This information is general in nature and should not be used as a substitute for financial advice. Always consult your financial adviser before making any financial decisions.