Across the insurance industry, heart disease rates as one of the top three causes of claim for both term life and trauma cover [1]. For BT, heart-related issues make up approximately 15 per cent of all living/trauma claims [2]. For older males, it is higher, making up approximately a third of all trauma claims across the industry [3]. The risk is significant. One in two Australian men aged 45 or older, with two or more risk factors (such as high blood pressure, high body mass index, poor diet, lack of physical activity and smoking) will have a cardiovascular event by age 80 [4].
Appropriately, February is Heart Research Month, prompting Australians to reflect on the impact of heart disease on the lives of those who suffer from it. Cardiovascular disease is the second largest cause of burden (18 per cent), just behind cancer (19 per cent), out of all diseases measured. ‘Burden’ describes the amount of time lost due to both fatal and non-fatal events, i.e. number of years of life lost due to premature death, together with years of healthy life lost due to disability [5].
BT sees these heart-related claims each and every day. It is a time when clients need strong support and a sound plan with an adviser can play a key role. The gap payment between government-subsidised medical care and the cost of treatment can run into thousands of dollars. In these circumstances, having adequate cover can make an enormous difference to the financial position of clients and their families. This article gives an overview of the policy types that provide cover for heart-related matters.
Keeping life going with income protection
Income protection policies with multiple definitions of total disability provide different pathways to claim. A policy with a 10-hour definition gives claimants the flexibility to work up to 10 hours a week while undergoing treatment, without financial penalty. This is particularly useful for self-employed clients who need to touch base throughout the week to ensure things run smoothly. BT insurance policies also include a counselling benefit to give access to support and comfort during difficult and times.
If living (trauma) insurance is too expensive, a lump sum benefit can still be accessed through a built-in crisis benefit, as part of a comprehensive income protection policy.
Continuing to meet expenses with total and permanent disability (TPD) insurance
In more serious circumstances, if heart disease advances to the extent your client becomes totally and permanently disabled as defined under the policy, TPD insurance can pay a lump sum benefit.
There are two main types of TPD insurance – ‘own occupation’ and ‘any occupation’. Own occupation TPD insurance proceeds are payable if your client is permanently unable to work in their current occupation. Any occupation TPD insurance proceeds are payable if they are permanently unable to work in an occupation that they would be suited to with their education, training and experience. Some policies will also pay a benefit if your client is able to work, but in a severely reduced capacity. This creates many options for a heart disease-affected client when reassessing future plans for work.
An own occupation TPD definition is more likely to be met as the definition is more generous. However, own occupation TPD premiums are approximately 50 per cent more expensive than any occupation TPD premiums.
Preparing for the unexpected with living insurance
Living insurance (trauma) provides financial assistance for patients at risk of suffering financially as a result of their loss of income, or increased expenses, caused by significant illness or accident.
Where TPD requires the patient to be unlikely to work again and income protection pays if they are unable to work either temporarily or permanently, living insurance payments require claimants to meet the definition of one of a list of specified diseases and injuries, meaning the coverage is based on the diagnosis of the illness, rather than the level or length of the disability.
Although initially covering only a handful of conditions, living insurance has expanded to cover up to 60 conditions, including a range of heart-related events.
BT’s Living Plus insurance can provide a full payment for the following cardiac medical events:
- Heart attack
- Angioplasty
- Coronary artery bypass surgery
- Cardiomyopathy
- Heart valve replacement or repair
- Aortic surgery
- Out of hospital cardiac arrest
- Open heart surgery
- Pulmonary hypertension.
A partial payment may be made for angioplasty (single or double vessel) or intra-arterial aortic surgery.
When making a decision on which insurance option and level of cover are most suitable for a client, key factors to consider are whether to include funds for treatment, supplementary income, reducing debt or allowing a spouse to take time off work. Stress may contribute to heart disease and therefore a reduction in debt provides more flexibility with work choices.
When choosing an insurer, it’s also important that their definitions are reviewed regularly, ensuring that claims criteria keep up with medical practice and that multiple methods of diagnosis are included.
Taking care of the family with term life insurance
Term life insurance pays a lump sum benefit if the insured dies or suffers a terminal illness. If your client is deemed to have less than 24 months to live, an advanced payment can be made for terminal illness. Not all policies are this generous and may restrict payment to circumstances where your client has less than 12 months to live, rather than 24.
Claim proceeds can be used to pay off debts and provide funding to allow your client’s family to maintain their standard of living, including continuing to live in their current home.
A heart disease diagnosis can often be overwhelming. However, a comprehensive insurance plan can alleviate the stress associated with financial uncertainty, and allow your client to focus on their health and family.
Rachel Leong is product technical manager for BT Financial Group
[1] The risk store, Industry Stats 2015
[2] BT Trauma claims, admitted: 1 October 2013 to 30 September 2014
[3] Gen Re Australia, Australian Critical Illness Survey 2008
[4] Heart Foundation website: Cardiovascular disease fact sheet
[5] AIHW. Health care expenditure on cardiovascular diseases 2008-09. Cardiovascular disease series. Cat.no. CVD 65
