Why do people use Critical Illness Insurance?

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

Tags: Insurance

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The information on this site is intended as a guide only. The information is of a general nature and does not and cannot ever constitute personal advice.
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