Cancer need not cripple your finances

Today is Pink Ribbon Day here in Australia. It is a day to show support for those affected by breast cancer, to raise funds for research and also to raise awareness.

Last month I attended the Pink Ribbon Ball in Perth and was privileged to hear cancer survivor, Pauline speak of her experience and of the support she received. There were several elements of her story that struck me as worth sharing with you:

  • Pauline, and many others like her often choose to quit work for months or years to give them the best chance to fight the cancer.
  • Many families affected by breast cancer suffer serious financial hardship as a result of the medical costs and the choice to reduce working hours.
  • The financial hardship adds to the emotional burden of fighting cancer, so the financial support provided by the WA Cancer Council was very valuable.

What troubles me is that it is not necessary for you Jane to suffer financially if you or your partner become seriously ill. For about the cost of two cups of coffee per week you could give yourself some financial security.

Could this happen to you?

About 11,800 Australian women are diagnosed with breast cancer each year.About 2,700 women die of breast cancer each year in Australia.One in 11 women in Australia will develop breast cancer by the age of 75.
(Source: Cancer Council NSW)

You can calculate your personal risk of breast cancer using a new calculator launched yesterday by the National Breast Cancer Centre. I had a test run of the calculator and was impressed by the detail in the questions, the explanation of the risk factors and the report of things to consider. Follow this link to calculate if you are at increased risk of breast cancer.

Financial protection using trauma insurance

A little known insurance that provides protection in the event of serious illness is called trauma insurance. I see trauma insurance as providing you with the opportunity to focus all your efforts on surviving and doing the things that are most important to you.You can use trauma insurance to:

  • Provide a lump-sum to cover medical costs (which could be quite high if you want to be able to try the more cutting edge treatments).
  • Cover your lifestyle expenses and loan repayments for one or more years so that you (and your partner perhaps) can choose not to work without placing a financial burden on your family
  • Cover the cost of doing certain things you had always wanted to do and never got around to doing. (Like taking the kids to Disneyland, perhaps.)
  • Provide you with the choice to “smell the roses” and evaluate your life

The level of cover you require will depend on how much you want to set aside for each of the above items. For example, everyone’s lifestyle expenses are different and also will want to cover a different length of time.

It’s very affordable

You can get low cost trauma insurance from as low as $200 per year.Whilst cost is important, I feel that it is important to ensure that the policy covers you for the situations you are most concerned about. Policy terms differ between insurers and policies so you need to pay attention to the detail.

For example, less than one third of the trauma insurance policies reviewed had industry leading definitions for cancer of the female organs.

An industry leading definition is one that is more generous and therefore on which you are more likely to receive a benefit. (Based on over 50 policies rated by external researchers, PlanTech.)

You may pay a little more for an industry leading definition but that is better than buying a cheap policy that is almost worthless in your time of need.

How affordable?

The following table gives you an idea of how affordable trauma insurance can be. I narrowed my calculation to only those policies with an industry leading definition of cancer for female organs. I have then listed just the lowest cost of those policies, based on providing $200,000 of trauma cover.

Age Lowest Cost p.a.
$200,000 Cover
Industry Leading Definition
20 $227
25 $266
30 $326
35 $387
40 $568
45 $862
50 $1,300

In reading the table above please note:

  • You should calculate your own level of cover based on the guidance provided above – $200,000 is not a recommendation.
  • Premiums vary based on a number of factors including age, level of cover, medical history and smoking status.
  • Choosing the lowest premium policy may result in less generous definitions for other conditions like stroke, which may be important to you.

Give yourself the support

This Pink Ribbon Day as well as donating to charities that support cancer research & treatment I encourage you to consider supporting yourself. Speak to an adviser about purchasing a trauma insurance policy, or adding trauma cover to a life and total & permanent disability policy.

You deserve the peace of mind and to give yourself the best opportunity to beat any serious illness you may suffer.

Certified Financial Planner professional, Matt Hern has three times been awarded as one of Australia's Top 50 Financial Planners by The Australian Financial Review Smart Investor. He is passionate about guiding you on the right financial choices to achieve what you really want. Matt Hern is an Authorised Representative of Charter Financial Planning Limited AFSL 234665. All information is general advice only.

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