Crisis Recovery insurance means you can focus on getting better, without worrying about how you’re going to get by once you recover.
Crisis Recovery insurance (also called Critical Illness Trauma Recovery insurance) is designed to pay a specified lump sum (or in some cases installments) to you if you’re diagnosed with a specified serious illness or injury that's covered by the policy such as cancer, heart attack, stroke, and breast or prostate cancer.
Up until now, this was simply not possible for people with complex health conditions.
- Poor health can destroy wealth quickly. Hits to our health are often far worst than other financial losses because they often dry up our income-making capacity too.
- Today people often use it as part of a backup plan to fund their major medical expenses, reducing (or even paying off) debts and maintaining their lifestyle while they recover.
- Crisis Recovery insurance is a useful backup plan when you don't have access to savings or large sums of disposable cash when you may need it the most.
An uncomfortable reality
Today's rising cost of sophisticated medical treatments and pharmaceutical interventions means that having a health crisis now equates to having a financial crisis. Money has become a potent treatment tool as advances in medicine.
This is where Crisis Recovery insurance can be a powerful safety net.
Depending upon the level of cover you choose, it can even allow you to make permanent lifestyle changes like not needing to return to work full time.
Key Terms to know
- The benefit amount is the amount the policy covers you for as chosen by you.
- The defined conditions (listed in the PDS) are the specified conditions the policy is designed to pay out for.
Practically speaking - 'remove the worry of paying bills while you recover from a serious condition'
Case Study
Meet George: single again and working hard to re-establish his life after a relationship change. After a recent Family Law Court order, he lost most of his assets and a sizeable chunk of his superannuation so he’s having to rebuild his life, a little faster than expected.
Apart from just dealing with the stress of a relationship breakdown, he's also dealing with a diagnosis of prostate cancer. The prospects for full recovery look good, but George still needs a plan to make sure his partner and stepdaughter are cared for and have certainty about his personal financial position too.
- He will need to continue to pay his rent and living expenses while he recovers and works through the uncertain length of rehabilitation after chemotherapy has finished.
- George’s Crisis Recovery insurance payout means he can choose to afford the cost of elective cancer treatment and doesn’t have to ‘wait for a year to see how it progresses’ and ‘wait for a bed in a public hospital to become available’.
His insurance benefit payment means he can continue to live in the same area where he feels settled and connected and continue to meet his usual living expenses. He can even afford to pay his sister to take 2 months off work to stay with him if he needs more help at home during treatments, while he focuses on getting better.
George has significant financial options available, because he chose to set up a Crisis Recovery insurance backup plan, just in case.
Why you may need Crisis Recovery insurance
Crisis Recovery Illness insurance (aka Trauma Recovery insurance) is especially important for single people who may not have dependable family support, for people with dependents or who might have a non-working partner.
- Most Australian's just don’t have ready access to at least 6 months of emergency savings at hand that can continue to pay all their debts and normal living expenses.
- Add to this the increased financial burden of unexpected medical and rehabilitation costs and a medical crisis can quickly become a financial crisis too.
It’s especially relevant for:
- Singles with low family support
- Young families with large debt obligations and low salable asset values
- People who are the major income earning in a relationship
- People with low emergency savings at hand
Take a moment to consider how much immediate cash reserves you have on hand today to put towards paying for a serious medical issue (particularly where you may need to stop work due to serious medical trauma or injury).
- What's your realistic plan to cope with the mortgage repayment or the weekly rental, the car loan and credit card repayments and everyday expenses - on top of sudden medical costs for treatments and rehabilitation?
Real Life Statistics
- An estimated 145,000 new cases of cancer will be diagnosed in Australia this year, with that number likely to rise to 150,000 in 2020.Cancer Council – Facts and Figures
- Almost half a million people are hospitalised each year as a result of injury, and a further 12,000 people die due to injury. Australian Institute of Health and Welfare – Injury, June 2017
The average lifetime Cancer Management1 costs for people 15 years and over are:
- $95,460 for head, neck and thyroid cancers
- $74,600 for lung cancer
- $51,460 for bowel cancer
- $36,800 for prostate cancer
- $36,040 for breast cancer
- $20,360 for melanoma skin cancer
Data source 1 Zurich, the Cost of Care whitepaper, pp.11 – 12
How it works together with other insurance covers
This is how Crisis Recovery insurance works alongside Income Protection.
- Crisis Recovery insurance is designed to pay an immediate lump sum to help offset unexpected medical expenses should you suffer a medical crisis specified in the policy, to help you stabilise debt obligations and personal cash flow.
- Income Protection insurance is designed to protect up to 70% of your income after a waiting period of your choice, while you cannot work due to sickness or injury.
- TPD insurance is designed to protect against long-term disability and pay a lump sum after a 6-month wait if you become permanently disabled, as defined in the policy and you can no longer work in your current occupation.
Together they can protect your immediate loss of health and your future loss of income-earning ability.
Questions people ask about ...
Crisis & Trauma Recovery Insurances
Take a look at some quick questions people ask about Accident Only protection insurance.
What is it?
Crisis Recovery Insurance (AKA Trauma Insurance or Recovery Insurance) provides a lump sum payment if one of the many insured trauma events listed in the policy, were to happen to you, such as being diagnosed with advanced cancer or having a major heart attack or stroke.
- While you may physically recover, you may still be suffering financially for many years to come so it makes sense to protect yourself from the increased financial costs if a significant illness means you can’t work for some time.
How does Crisis Recovery Insurance help you?
A serious illness puts stress on your mental and emotional well being. It can be financially devastating for you and your family. Crisis Recovery insurance is designed to pay you an immediate lump sum of money to help with recovery and income liquidity if you are diagnosed with one of the listed medical events.
What's the chance of needing Crisis Recovery Insurance?
- There is a 1 in 3 chance of needing to claim on a Crisis Recover policy during your lifetime. (This type of policy is the one you will more likely than not, need to claim upon).
You’ll usually receive a lump sum payment that you can use to cover things like out-of-pocket medical expenses and regular living costs. This means you can focus on getting well, without worrying about how you’re going to get by once you recover.
Different policies have different levels of cover for specific conditions; such as being diagnosed with advanced cancer, major heart attack or stroke, advanced dementia or cancers. Your Unusual Risks Financial Adviser can help map these benefits to your specific needs.
Do I need Crisis Recovery insurance?
Most probably, Yes.
Crisis Recovery insurance can be particularly helpful if you don’t have other forms of financial assets you can sell if needed and protection such as Income Protection Insurance, Life Insurance, Private Health Insurance or Employee Benefits. How much you’ll need is usually based on your cost of living and maintaining any debts you have.
Many people use Crisis Recover insurance to offset their Income Protection cover (that only covers a maximum of 75% of your income) to pay for major medical and rehabilitation costs. Some people even use it to pay out a mortgage in the event they suffer one of the Crisis conditions listed in the policy.
Are the names Crisis Insurance and Trauma Insurance interchangeable?
Yes. Crisis Recovery Insurance and Trauma Insurance usually refer to the same type of policy, just from different providers (and yes we think this causes unnecessary confusion too).
What class of medical conditions can be covered by a Crisis Recovery policy?
Every life insurance company has a different set of conditions covered by a Crisis Recovery policy so you need to work with an adviser to help match you to one that meets your needs
Broadly speaking, Criss Recovery insurances can cover about 40+ listed medical events from six main categories including
- Cancers and tumours of specified severity
- Heart conditions of specified severity
- Severe accident, loss of sight, hearing, speech, use of limbs, paralysis, and loss of independence
- Neurological conditions at the specified severity
- Blood conditions
- Specific Chronic conditions
For a full listing client the list below.
List of individual medical events can be cover by Crisis Recovery insurance
Here is a sample of what can be covered by different Crisis/Trauma policies.
Cancers and tumours at the specified severity
- Benign tumour in the brain or spinal cord (with neurological deficit)
- Cancer (excluding early-stage cancers)*
Heart conditions at the specified severity
- Angioplasty (triple vessel)
- Aortic surgery
- Cardiac arrest (out of hospital)
- Cardiomyopathy (with significant permanent impairment)
- Coronary artery bypass surgery*
- Heart attack (of specified severity)*
- Heart valve surgery
- Idiopathic pulmonary arterial hypertension (with permanent impairment)
Severe accident and loss; loss of sight, hearing, speech, use of limbs, paralysis, and loss of independence
- Diplegia
- Hemiplegia
- Major head trauma
- Loss of use of hands, feet or sight, hearing, independence, sight, speech
- Paraplegia
- Quadriplegia
- Severe accident or illness requiring intensive care (with mechanical ventilation for 10 consecutive days)
- Severe burns (of specified extent)
Neurological conditions at the specified severity
- Bacterial meningitis or meningococcal septicaemia (with severe life impact)
- Coma (of specified severity)
- Dementia including Alzheimer's disease (diagnosis)
- Encephalitis (with permanent neurological deficit)
- Motor neurone disease (diagnosis)
- Multiple sclerosis (with impairment level)
- Muscular dystrophy (with impairment level)
- Parkinson’s disease (diagnosis)
- Stroke (of specified severity)*
- Aplastic anaemia (requiring treatment)
- Medically acquired HIV
- Occupationally acquired hepatitis B or C
- Occupationally acquired HIV
Other specific chronic conditions at the specified severity
- Chronic kidney failure (end stage)
- Chronic liver disease (end stage)
- Chronic lung disease (end stage)
- Diabetes (of specified severity)major organ transplant (or waiting list)
- Pneumonectomy
- Severe rheumatoid arthritis (with permanent daily life impact)
*Pro Tip: Make sure to read each insurance providers list of specified medical traumas covered by their Crisis Recovery Insurance as there is great variation between them.
How much does Crisis Recovery Insurance cost?
The cost of Crisis Recovery Insurance policy is based on a range of factors: your age, gender, smoking (and vaping) status, current health, lifestyle, and general occupation.
How do you pay for Crisis Recovery Insurance?
Crisis Recovery insurance premiums can be paid monthly, half-yearly and yearly by direct debit and may be tax-deductible. The premiums for this type of policy cannot be paid from a super fund.
How much Crisis Recovery Insurance cover do I need?
Trauma Insurance can be particularly helpful if you don’t have other forms of financial assets and protection such as Income Protection Insurance, Life Insurance, Private Health Insurance and Employee Benefits.
How much you’ll need is usually based on you and your family’s cost of living and any debts you have.
Can they cancel the policy on me if I get sick in the future?
No.
A Guaranteed Renewable Crisis Recover policy obligates the insurer to continue coverage as long as premiums are paid on the policy, regardless of changes in the policy owners health or occupation.
Can I increase the amount of cover if I need later?
You can always apply to upgrade an existing policy to a higher level of cover when you're verifiable income increases beyond 70% of your current in force cover.
Do I have to disclose future changes in my health?
No.
There is no requirement for you to update a life insurance company about any changes in your future health.
Once a Crisis Recovery Insurance policy is in force, any future changes in your health (or even your occupation), will not affect your cover while the policy remains paid up and in force.
Where to Now?
Continue your journey…
- Make sure you Browse through our Blog
- Have questions? See our Frequently Asked Questions
- Discover someone with a similar situation in our list of Case Studies
- When you're ready to know if we can work with you, take our Anonymous Pre-assessment
- Send us an Email or Jump the queue and Call for a Chat
