Also known as trauma, severe illness, or critical illness cover. When you pass away your life cover will pay out, usually as a lumpsum. When you become permanently disabled your lump sum disability will pay out and, yes, you guessed it, as a lump sum. If you have income protection you will receive a regular, usually monthly, income if you are temporarily or permanently disabled.
So, what is trauma cover and why does everybody need it?
Marius Stephanus Barnard (3 November 1927 – 14 November 2014) was a South African cardiac surgeon and inventor of critical illness insurance. Barnard was a member of the team headed by his brother Christiaan Barnard that performed the world's first human-to-human heart transplantation in 1967. Barnard was motivated by the financial hardship he saw his patients suffer after he had treated their critical illnesses to convince the South African insurance companies to introduce a new type of insurance to cover critical illnesses. Barnard argued that, as a medical doctor, he can repair a man physically, but only insurers can repair a patient's finances. On 6 August 1983 the first critical illness insurance policy was launched by Crusader Life. (Source: Wikipedia).
Trauma cover addresses the gap between life cover and disability cover by providing cover for a critical illness diagnosis. Each insurer has a list of conditions that they cover and the definitions and criteria per event that the insured must meet to qualify for a claim. This list gets added to regularly. As a result of advances in medical technology more and more patients survive a critical illness diagnosis, but the associated costs can be financially crippling. Trauma cover is aimed at alleviating costs not covered by a medical scheme, lifestyle changes and the possible loss of future insurability.
At PWG our house view is to provide the client with at least sufficient cover to settle all household debt and to have R1 million rand to address lifestyle changes. But we strongly urge clients to buy as much cover as they can afford at the earliest possible age!
Claims for critical illnesses are increasing with cancer leading the charge.
If you don’t have trauma cover or if you would like to increase or review your cover, speak to us without delay!
Author: Anton Schutte.