By Simon Keir, Westlawn Senior Insurance Specialist 11 November 2015
The financial effects of a sickness or injury can vary widely. While a dose of the flu or twisted ankle might not have much impact, a broken leg or carpal tunnel syndrome might keep you out of action for a few weeks or months and cause some temporary financial headaches.
But what if you were to suddenly and unexpectedly suffer a more permanent sickness or injury?
Injuries such as paraplegia or a major head trauma, or sicknesses such as cancer or depression, can cause permanent impairments that can leave you unable to ever return to work. The financial impact of these medical conditions may include the total loss of income and the need to service debts and cover living expenses for you and your family.
Hidden costs of total and permanent disability
Apart from the need to replace permanent income loss and pay off mortgages and other debts, a total and permanent disability can generate a range of additional expenses:
Medical treatment: Expensive drug therapies, regular diagnostic tests and operations may be required. You may also wish to pursue alternative therapies or more sophisticated treatment options in other countries. Many of these costs may go well beyond what your health insurance or Medicare may cover.
Home renovation costs: Your medical condition may require customised alterations to be made so that you can continue to live in your own home without unnecessary impediment or difficulties.
Apparatus and technical aids: You may require aids such as a wheelchair, a sling for the bedroom, exercise equipment and automation of doors and appliances.
Rehabilitation expenses: Quality of life and rate of recovery may be improved through rehabilitation therapies. This may require special equipment for the home, travel to specialist centres or the employment of physical therapists.
Home and nursing care: To make life more comfortable and convenient at home you may wish to employ assistance for nursing care, household tasks, personal care and home maintenance.
Transport costs: You may need specialised vehicles or modification to existing vehicles in order to maintain mobility and quality of life.
How can these costs be funded?
If your personal insurance plan only includes life insurance and perhaps income protection, then the costs for any of the above items may be completely out of reach. Life insurance is designed to pay in the event of death or terminal illness, and while income protection may cover your ordinary day-to-day living costs, it may not cover those additional expenses that relate to your disability.
One way to help cover these costs is with total and permanent disability insurance, which, if you are eligible, will provide you with a lump sum payment you can use as you wish. It forms an integral part of your personal financial protection and helps you to retain a maximum level of independence, while reducing the financial stress and upheaval for your family.
Brian was an IT consultant who ran his own successful business in a regional country town. One day while up a ladder cleaning his gutters, he slipped and fell heavily, causing severe spinal injuries and minor brain damage.
The extent of his injuries left him in a wheelchair and unable to maintain the concentration necessary to perform his work. Brian underwent a prolonged course of rehabilitation therapy at a specialist centre in a capital city more than 300 kilometres from his home at a cost of $600 per session, every week for one year. He and his wife also had the extra expense of travelling there every week and staying overnight near the city centre.
Their home required some major modifications to accommodate his wheelchair, including ramps and doorway widening, bathroom alterations to allow shower and toilet access and kitchen alterations to allow access to benchtops, sinks and cupboards. The total cost of the modifications to the family home was $100,000.
Brian also wanted to relieve stress for his wife and 2 children and decided to employ daily nursing care for bathing and dressing at a cost of $700 a week, as well as some home help to assist his wife with household chores at a further cost of $400 a week.
Fortunately, Brian’s financial adviser had advised him to take out $1 million of total and permanent disability insurance as part of his personal insurance plan. Once he was paid this lump sum benefit, Brian and his wife decided to pay off their $400,000 mortgage and immediately undertake the home alterations. This left them with $500,000 to invest to produce an income stream that would supplement his income protection and easily fund the rehabilitation and home care costs.
To find out more about disability insurance, contact Simon Keir:
The information provided on this website is intended to provide general information only and the information has been prepared without taking into account any particular person’s objectives, financial situation or needs. Before acting on such information, you should consider the appropriateness of the information having regard to your personal objectives, financial situation or needs. In particular, you should obtain professional advice before acting on the information contained on this website and review the relevant Product Disclosure Statement (PDS). Relevant PDSs can be obtained by contacting us.
Westlawn Life Insurance Pty Ltd ABN 91 164 146 285 is a Corporate Authorised Representative (No. 444800) of ClearView Financial Advice Pty Limited ABN 89 133 593 012 AFS Licence No. 331367 GPO Box 4232, Sydney NSW 2001.