Helping your clients with trauma insurance claims

Col Fullagar studied the aftermath of one particular trauma insured event and discovered a fourth, hidden area, in which this type of insurance can assist financial planning clients.

Trauma insurance has always been promoted as a means of providing the life insured who suffers an insured event with a lump sum benefit payment so they had:

• Financial access to the best possible medical care either in Australia or overseas, if necessary;
• Financial access to rehabilitation services; and
• The ability to implement any desired changes to their lifestyle.

A trauma insurance claim payment certainly continues to provide considerable benefits in these three areas. However, by studying the aftermath of one particular trauma insured event, it seems it may be able to assist in a fourth.

Of all the insured events covered within the policy, claims statistics from insurers indicate that the one most likely to occur is cancer.

In 2005, 752 cancer survivors were surveyed 12 months after their cancer diagnosis, and a question was posed to them: 

“What problems have you been experiencing in dealing with your cancer?”

A review of the Top 20 or so responses provides an insight into the positive impact a trauma insurance benefit payment might have in an otherwise very difficult time, and it also reveals the hidden, fourth trauma insurance benefit.

Half of the problems faced by the cancer survivors surveyed were of a physical nature; they were problems that existed in the sense that the person “had” them:

• 67 per cent had fatigue and loss of strength; 
• 48 per cent had difficulty sleeping;
• 40 per cent had difficulty making long-term plans;
• 37 per cent had ongoing major problems with their health;
• 36 per cent had a diminished ability to concentrate;
• 29 per cent had difficulty meeting medical expenses;
• 27 per cent had difficulty returning to their former role;
• 26 per cent had difficulty providing financially for their family;
• 22 per cent had eating difficulties;
• 20 per cent had problems communicating with their spouse or partner;
• 17 per cent had difficulty in obtaining adequate insurance; and
• 16 per cent had difficulty pursuing the career of their choice.

Clearly, a trauma insurance benefit payment could provide pragmatic assistance with the above.

Having access to an effective rehabilitation regime might assist to improve overall fitness and endurance, which may, in turn, alleviate some of the issues with sleeping.

Difficulty in making long-term plans may, in part, be a flow-on from current financial difficulties or a lack of assurance of ongoing financial security. If it was, having a significant lump sum readily available could serve to remove or reduce these concerns. Some of the lump sum could even be invested to top-up payments being received from income protection insurance.

With the average gross personal cost of breast or lung cancer treatment being around $25,000, and the equivalent cost for leukaemia up to $100,000*, it is not difficult to see that someone who does not have access to sufficient funds may be concerned about meeting medical expenses.

Effectively combating ongoing medical problems may require setting up a financial reserve fund.

If there are difficulties returning to a former role or finding the career of choice, having funds available can open up a number of opportunities. It may be that:

• Sufficient funds are available, such that the need to work a standard week is no longer necessary;
• Superannuation savings can be boosted so that early retirement is possible; or
• Time off work can be taken so that the ideal job can be found.

Insurance is a lot about providing options.

The difficulty of providing financially for the family is an obvious area where a lump sum benefit payment should assist, and again, it’s about options:

• Being free of debt might reduce the worry about being able to provide financially for the family;
• School fees may be an issue, so being able to pre-pay them will go a long way; and
• Hiring a home-carer or cleaner may free-up other family members to return to the workforce.

When problems are related to communication, counselling could help — as could taking time off work, spending more time together, dinner at a top restaurant, a romantic weekend away, or an overseas holiday.

And finally, if the issue is an inability to access sufficient life insurance, already having it in place or having a buy-back facility under the policy could be the ideal solution.

Even if additional insurance was needed – which generally would be subject to an underwriting loading – the chances are, it would be more affordable. 

Clearly, having appropriate trauma insurance in place will provide a practical way forward for many of the physical problems that may arise. However, these problems only made up half of those identified by those taking part in the survey.

The other half were not physical problems, as such – they were psychological issues epitomised by the word “felt.”

• 68 per cent felt fearful that illness would return;
• 58 per cent felt fearful about the future;
• 41 per cent felt less physically able to engage in sexual intercourse;
• 40 per cent felt uncomfortable with their changed physical appearance;
• 39 per cent felt a preoccupation with being ill;
• 37 per cent felt vulnerable;
• 33 per cent felt helpless;
• 33 per cent felt angry;
• 30 per cent felt dependant;
• 25 per cent felt isolated;
• 25 per cent felt guilty; and
• 20 per cent felt fearful about infections and crowds.

Feelings (particularly in situations such as cancer survival) are deeply personal, and it would be inappropriate to comment on them.

However, it is appropriate to consider the positive impact that a lump sum benefit payment under a trauma insurance policy might have in possibly reducing or alleviating the problems identified above. 

Confidence that the best medical care available has been obtained may reduce the fear that illness may return.

Reassurance regarding financial security may reduce fears about the future.

Effective rehabilitation – including access to a gym and even a personal trainer – may improve feelings of self-worth, which could manifest in improved relationships.

The increased effectiveness of drug regimes in cancer treatment has reduced, but not removed the need for radical surgery.

If surgery is required, being able to afford cosmetic surgery or the latest prosthetic devices may well assist to improve feelings about a changed appearance; or it may be that a personal make-over would help. A new wardrobe might work wonders with self-esteem.

It may even be that giving the home a make-over could assist, as could a fresh coat of paint, renovations or landscaping the garden.

As for feelings of vulnerability, helplessness, anger, dependence, isolation and guilt — highly qualified professional help may be what is required.

Stepping back from the above, it would seem that trauma insurance is in fact providing valuable assistance in not three, but four key ways, by virtue of the lump sum benefit payment. The receipt of this payment will enable the life insured to have:

• Financial access to the best possible medical care either in Australia or overseas, if necessary;
• Financial access to rehabilitation services; 
• The ability to implement any desired changes to their lifestyle; and
• The facility to better cope with the psychological issues that may arise.

Trauma insurance is not just giving the life insured an improved opportunity to return to physical health, but also to psychological health.

With the correlation between adverse feelings and overall health being well documented, the importance of psychological wellbeing cannot be overstated. Interestingly, the average proportion of people reporting problems in this area was 37 per cent, as compared to 30 per cent with physical problems.

The fourth purpose of trauma insurance has lain largely hidden in the past. It would be good to see it being given greater prominence.

Col Fullagar is RI Advice Group’s national manager of risk insurance.

*Access Economics – Cost of Cancer in NSW,  April 2007.