What should your crisis recovery policy cover you for?

In this continued series of articles I’ve been looking at various types of insurance cover and what medical conditions or accidents you should make sure you’re insured for.

To get some real life data informing your decisions I’ve been using statistics from AIA Australia, one of this country’s leading insurance companies.

Ok let’s get into it, so the biggie to make sure your policy covers you for is obviously cancer.  Over 50% of all crisis recovery claims AIA paid out in 2014 were for cancer, of which 14% were for breast cancer.  Broken down by along gender boundaries 81% of women claiming in this category were claiming for cancer conditions.  A similarly high percentage of men did as well, at 64%.

Bottom line, you should consider a policy that fully covers a wide range of cancers but also make sure your insurance companies cancer definitions are up to date and relevant.

If we look at a quick snapshot of just breast cancer stats:

  • In 2015, it is estimated that 15,600 women will be diagnosed with breast cancer. 
  • The risk of developing breast cancer increases with age; the average age of first diagnosis in women is 60 years. 
  • One in eight women will develop breast cancer in their lifetime (http://www.bcna.org.au/about-breast-cancer)

Following close behind cancer were cardiovascular conditions.  The greater proportion of these clients were men, in fact those with heart conditions made up 23% of all crisis recovery claims for men.  According to AIA someone in Australia suffers a heart attack every nine minutes.  Aside from this being a sad indictment on our diet, exercise, or lack of it, it’s also a sobering reminder to make sure your insurance companies definition of a heart attack fits what might happen to you.  I can’t stress this enough, you should consider being covered for the greatest eventuality that might occur.

So that’s two of the key events that might trigger a crisis recovery claim but what sort of age groups do they happen to?  Well AIA’s youngest crisis event claimant was 25 years old, the average female was 48 and the average male was 51, the oldest claimant overall was 68.

Key insurance facts

  • According to a study jointly conducted in 2010 by Lifewise and NATSEM over 95% of Aussie’s don’t have adequate insurance.
  • A Rice Warner report on underinsurance in Australia in 2011 stated that 1 in 5 men and 1 in 7 women will suffer a critical illness before the age of 64 

As the cost of living increases, many people look for ways to cut back where they can, including cancelling their life insurance to free up extra cash flow.

While cutting back on this expense may make sense in the short term, it could cause you significant financial hardship in the future, in the event of the unexpected diagnosis or life changing event. 

This leads us to what AIA have identified as an “insurance gap” regarding crisis recovery insurance that is: 

  • The average age of people who took out crisis recovery insurance was 39.7
  • The average age of someone cancelling their policy was 42.5 years.
  • The average age of someone making a claim was 50 years. 

So anecdotally what we see from this is that possibly people take out insurance when they are in their prime earning years, when paying for it has less impact on their lifestyle. 

They don’t claim on it for a few years and possibly think, “Is this a needless expense?”  But they haven’t reached the average when people claim, therefore leaving them statistically open to 7.5 years of risk. 

If this article has raised some issues for you contact one of our Rate Detective consultants who will be happy to talk you and provide you with general advice.

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Published on July 7-th, 2015 in Trauma Cover
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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