trauma insurance

A Quick Guide to Personal Insurance


Insurance can get confusing. Huge policy documents, insider lingo, fine print everywhere. It’s supposed to provide peace of mind, but can instead just play havoc with even the sharpest samples of grey matter.

So, here’s a 101 guide to understanding your personal insurance.


In New Zealand, there are four things a person can insure themselves for:


1. Life


Why? To repay debts, cover funeral costs and give your loved ones the financial freedom to properly grieve.


Who? This pays a lump sum to your estate or the person of your choosing.


2. Trauma


Why? Give yourself space to recover, whether or not you’re off work for a prolonged period of time.


Who? This pays a lump sum to you if you are diagnosed with a specific illness.


3. Income Protection


Why? Unfortunately the bills still come in if you’re unable to work due to injury or illness. This will pay a percentage of your income (or mortgage repayments) until you’re able to return to work.


Who? This pays you a monthly sum.


4. Health


Why? If you need non-acute surgery, you can skip the public queue and go straight to a private hospital.


Who? This pays the medical professionals that are looking after you.


Finally, it’s important to ensure that your cover is relevant to your life. Here are a few examples of life events that may impact the relevance of your cover. If any of these apply to you, give us a call!

•          You have new additions to your family

•          Your kids leave home

•          You get married and/or divorced

•          Your job changes

•          Your salary changes

•          You have had any health issues (more than just a GP visit)

•          You have set up a new company or trust

•          You have bought or sold a property


The importance of being earnest about insurance cover


Just because you were insured yesterday, doesn’t mean you’ll be covered in the future. Alex shares a powerful story that illustrates the importance of an annual insurance review.

You may have read the story of the Auckland mother who was suddenly struck with Guillain-Barre syndrome in August of this year. She had a trauma insurance policy in place for over 20 years and was devastated to find that her insurance policy did not cover Guillain-Barre syndrome.


Trauma insurance is a complicated product compared with life insurance and there is a big difference between the types of cover and the conditions covered in your policy. Many people assume that if something traumatic happens to you then your trauma insurance will cover it. However, not all policies are created equal and it pays to check the conditions listed in your policy. Cheap polices may cover five to ten different conditions, while the quality insurance cover may cover up to 40 different conditions with better policy wordings.


In this instance of the women with Guillain-Barre syndrome, her policy had not been changed since she had originally taken it out over 20 years ago. With the advances and changes in medical treatment over the last 20 years her policy wording would have become outdated and covered conditions that were considered traumatic at that time. So, outside influences can influence your cover, even if things from your point of view haven’t changed.


The good news is that trauma cover policies are typically getting better and better with more conditions being covered.


So, what does all this mean for you and me?


The above case highlights the importance of reviewing your cover annually. Making it an annual habit makes sure it gets done and we can do much of the leg work for you.


This annual habit to update your insurance will ensure your insurance reflects any industry changes or changes in your life situation and, most importantly, that your insurance cover has the highest likelihood of payout.


We are always happy to review your cover or simply just have a chat about what you need.


Alex Barendregt is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.