When taking different types of personal insurance policies into account, you tend to first think about providing financial protection for your household as a whole in the event of something unexpected happening to you, such as terminal illness or death. However, in some cases, unexpected trauma may occur to any of your loved ones at any time as well – which can often bring about results that are just as disastrous as if it had been you that it had happened to.
These days, the concept of cross insurance, namely where both heads of a household are insured (regardless of whether they are dual income earners or one is an income earner and the other a non-working partner), has become more crucial than ever.
It is also essential that you consider how it will impact your finances if one of your children was to pass away unexpectedly or be diagnosed with a terminal illness. Some aspects worth considering, especially with regards to injury or illness include:
- How will you cope financially if you or your partner (or both of you) had to cease working to look after your child temporarily, long-term or even on a permanent basis?
- Do you have sufficient resources on hand to cover the cost of any immediate or continual medical treatment, home care or costly medications that your child could need over time?
Child Trauma Benefit
In some cases, insurers may provide a unique form of personal insurance that has been customised to cover your child. This is known as the Child Trauma Benefit and it can be in the form of a built-in inclusion or as an optional extra (with a separate insurance premium that must be paid) to your existing trauma insurance policy.
A Child Trauma benefit policy will provide a lump sum payment to you in the event that your child passes away or experienced a specified medical event or condition. Depending on the specific insurer, and whether the Child Trauma Benefit is an optional extra or inclusion to your original policy, the lump sum payout can either be an amount determined by you at the time of application (for instance, up to a maximum insured amount) or it can be a fixed amount.
It is essential to keep in mind that if your Child Trauma Benefit is an optional extra, and the amount that has been specified as the sum insured has reached a specific threshold, underwriting could be required.
Medical Events that are Covered
The types of medical events that will be covered under a Child Trauma Benefit will normally vary between different insurance companies. Medical events that are covered will not normally be as extensive as those that fall under a normal Trauma Insurance policy. Below is a list of a few of the medical conditions or events that could be covered under a Child Trauma Benefit policy:
- Invasive cancer
- Benign spinal and/or brain tumour
- Hodgkin’s Disease
- Skin cancer
- Malignant bone marrow disorder
- Heart attack
Other critical events:
- Aplastic Anaemia
- Accidental HIV infection
- Bacterial meningitis
- Chronic kidney failure
- Brain damage
- Chronic lung or liver disease
- Loss of hearing
- Intensive care
- Loss of speech
- Loss of use of sight and/or limbs
- Major organ transplant
- Major head trauma
- Muscular Dystrophy
- Multiple sclerosis
- Severe burns
- Paralysis, such as hemiplegia, diplegia, paraplegia or quadriplegia
- Viral Encephalitis
Points to Keep in Mind
There are many aspects to consider when it comes to the Child Trauma benefit. While these will vary between different insurance companies, some are listed below. Please note that this is not a comprehensive list.
- Policy cessation, eligibility and conversion
You could discover that your Child Trauma Benefit:
- Has an end date that usually refers to a time just after the upper limit of the predetermined eligibility age bracket has been reached. This can sometimes also happen if the corresponding Trauma insurance policy that is holding the Child Trauma Benefit comes to an end
- Is only available to your child if they fall into a specified eligibility bracket with regards to age. For instance, between the ages of two years and 15 years
- Has the ability to be changed to a regular Trauma Insurance policy for the child just before they reach the policy end date related to the upper limit of the predetermined eligibility age bracket. If this happens, the policy then becomes theirs. However, depending on the amount insured, underwriting may sometimes apply
- Assured future insurability
You could find that you are able to increase the sum insured by a predetermined amount (up to a maximum limit) in the event of certain milestones being achieved, such as your child’s 6th, 10th and 14th birthdays – without an assessment of your child’s health being required.
- Qualifying periods and exclusions
You could find that the Child Trauma Benefit may not be paid out in the event of the following occurring:
- A medical event occurs within three months of the insurance policy being taken out or commencing
- The medical event in question has been caused as a result of a pre-existing or congenital condition, attempted suicide or a deliberately self-inflicted injury
- Full or partial payment
You could find that a full or partial payment is made under the Child Trauma Benefit. However, this will depend on the severity and type of medical event that occurs.
Although no one likes to think about his or her child passing away unexpectedly, or even suffering from a serious injury or medical condition, there is always the possibility of it occurring at some point. In the event of any of this occurring to your child, the Child Trauma Benefit can go a long way in helping to alleviate much of the financial stress that can occur to your and your family during this devastating time.
While a general overview has been provided in this article, it is important to remember that the Child Trauma Benefit can vary substantially between different insurers. As a result, it is essential that you obtain professional advice and read all of the accompanying documentation thoroughly – especially the Product Disclosure Statement.