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Counting the Cost of Serious Illness…. 3 Great Reasons to Protect Yourself Now

Unfortunately major illness is not confined to older generations and when it does strike someone under 40, the costs can be high over a lifetime. Fortunately the cost of protection at younger ages can be inexpensive and locked in for some degree of certainty for the long term. So are the young being encouraged to protect themselves?

As reported in The Sydney Morning Herald, recognition that Breast Cancer can strike younger women (said to be 800 Australian women per year) and the lifetime emotional and financial cost to sufferers has led to The National Breast Cancer Foundation launching a new support website, http://800youngwomen.org.au/

The SMH article quotes Breast Cancer Foundation chief executive Carole Renouf as saying that Breast Cancer had a disproportionate impact on those who were diagnosed under 40.

Co-incidentally, on the same day as I read that article I was provided with Insurance claim numbers for a leading Australian Insurer showing that total claim payments made for Trauma Cover (which pays lump sum benefits to people contracting certain cancers and other major illness), in calendar year 2013 was $83.9 million and only 6% of claims were paid to those under 40. For the same period 17% of all Total and Permanent Disablement claims, 14% of all income protection claims and 18% of all Life Insurance claims were paid to that age group.*

Of course those statistics could reflect a reduced likelihood of major medical Trauma at younger ages, or they could also represent a reduced likelihood that this cover is held by people under age 40.

If it is the latter, it would be counterintuitive given the generally lower cost of cover applicable to this age group. Couple this with the ability to build in in some cost stability and long term savings by selecting a “Level Premium” structure and the case for insurance at earlier ages becomes compelling.

For example, a Trauma policy taken out today paying a benefit of $100,000 for a 25 year old non-smoking female can cost $418 pa on level premium. By Age 65, and holding the benefit amount constant, that person will have paid $12,714 in total premiums. A 35 year old taking out the same policy today will pay $568 pa and by age 65, will have paid $13,601.

The 25 year old gets 10 years extra cover and pays $887 less for the privilege.#

    So the reasons to protect yourself now:

    1. major illness happens at all ages
    2. the younger you are when it does the greater the lifetime cost
    3. protecting yourself earlier can save you in premiums.

    Contact me here to arrange an appointment if you would like to discuss your individual goals, needs and circumstances.

    *Source: Claims Paid 2013, AMP Life Limited and The National Mutual Life Association of Australasia Limited Claims.

    # Name of Insurer withheld as the purpose is for strategic discussion rather than promotion of the products of a particular company.

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