One of the most commonly used, but most misunderstood, insurance policies is Critical Illness cover. Sometimes called "Trauma Insurance" is a lump sum of money which gets paid out if you suffer from one of the defined illnesses listed in the policy.
The big illnesses are the ones you'd expect – cancer, stroke, cardiac conditions. They account for the overwhelming majority of the Critical Illness claims, and most people are familiar with them because we see them all the time. Everyone knows a family member, co-worker, friend who has suffered from a critical illness – it is actually quite common.
Critical illness insurance is a unique product, which is designed for the living. You may well survive a critical illness, but there will certainly be a financial loss that you may never fully recover from. Here are some ways that clients use their Critical Illness cover:
- Leave of absence for you or your spouse
- Child care costs
- Domestic help
- Costs of medication that the public system might not provide
- Alternative treatment which can be costly but effective
- Treatment outside of NZ
- Time away from work to properly recover
- Nursing home/private nursing care costs
- Make changes to your home or vehicle if required
- Repayment of your debt
- Ability to change jobs if you so choose
- A recovery vacation with loved ones
Business owners will use critical illness insurance to provide much-needed funds to:
- Cover business expenses
- Shareholder buy-out
- Key person coverage
- Corporate debt repayment
- Provide cash for family members to come into business
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