Reducing the trauma: Why life insurance matters more than ever

Australians are living longer than ever before. But longer does not always mean healthier. Medical advances mean more people are surviving serious illnesses such as cancer, heart disease, and stroke. The challenge is that survival often comes at a steep financial cost, particularly for doctors and other professionals who rely on their income.

This article looks at the real financial impact of critical health conditions and why a well-structured life insurance strategy may be more important than ever.

The hidden costs of survival

Australia has one of the best public health systems in the world. But it doesn’t cover everything. If you face a serious diagnosis, out-of-pocket costs can be substantial. They may include:

• diagnostic imaging and pathology
• specialist consultations
• surgery and hospital stays
• medications not on the PBS
• rehabilitation and home modifications
• lost income during recovery

Cancer patients treated privately can face out-of-pocket costs significantly higher than those treated publicly.¹ A single course of immunotherapy may cost over $100,000 without subsidy.² And some emerging treatments like proton therapy may only be available overseas at significant cost. Even with insurance, many Australians delay or forgo treatment because of cost.

The financial toll of critical conditions

According to research, the three most financially burdensome health conditions in Australia are cancer, cardiovascular disease and stroke.

Cancer

• Around two in five Australians (43%) will be diagnosed with cancer by the age of 85.³
• 40% of diagnoses occur during working years (ages 25-64).⁴
• Patients who return to work take an average 13 weeks off (longer for those on chemotherapy).⁵
• 25% of patients face more than $10,000 in out-of-pocket costs every two years. ¹
• Some incur an estimated $50,000 to $100,000 or more in total costs.

Cardiovascular disease

Cardiovascular disease accounts for 12% of Australia's total disease burden.⁶ Most heart attack survivors return to work within three months, but recovery and reduced work capacity can affect income for longer.⁷ Medicare may cover much of the treatment, but lost income and rehabilitation costs can still be significant.

Stroke

Roughly 27,000 Australians have a stroke each year.⁸ One in four survivors never return to work.⁹ Ongoing care, home modifications and carer support add further financial strain.

Why professionals carry a greater financial burden

If you are a doctor or high-income professional, you may face three compounding pressures when dealing with a critical illness.

• Higher out-of-pocket costs. Private treatment preferences and postcode-based pricing often mean professionals pay more for the same procedures.
• Greater income loss. Time off work can result in tens or hundreds of thousands in lost earnings.
• Less public support. Many services outside hospital settings are not covered by Medicare or private health insurance.

The role of life insurance

Life insurance covers more than death. It also includes income protection, disability and trauma, sometimes called critical illness cover.  Together these products can:

• cover large out-of-pocket medical expenses
• replace lost income during recovery
• fund home modifications or carer support
• provide peace of mind during life’s most difficult moments.

Many people are surprised to learn that trauma cover works very differently from death, income protection and disability cover. Here is what makes it unique:

• It pays on diagnosis, not on your ability to work. Trauma cover pays a lump sum when you are diagnosed with a specific listed condition. You do not need to stop working or meet a disability definition.
• Claims are more common than you might expect. Because the conditions covered are among the most common health events, trauma cover has a higher likelihood of being claimed than most other cover types.
• It is the most expensive cover per dollar insured. This is precisely why professional advice matters when choosing the right level of cover for your circumstances.

The top four causes of trauma claims in recent years are cancer, circulatory conditions, accidental injury and nervous system conditions.¹⁰

Taking the next step

Understanding your exposure is the first step. Getting the right (or knowing you have) the right protection in place is the next.

At Avant, we understand the unique financial pressures doctors face throughout their careers. Our advisers can help you assess your current cover, identify any gaps and structure a life insurance strategy that works for your situation, your specialty and your income.

Talk to an Avant adviser today. Call 1800 128 268 or visit avant.org.au/lifeinsurance