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