Why advisers should talk childhood trauma insurance with clients

Planning for traumatic events, such as a serious illness or injury affecting a child, can be challenging for clients to understand, and in some cases, even approach. But for advisers, guiding clients through this kind of worst-case scenario planning can be critical.

“You unfortunately never know what might happen,” said Hayes & Co Insurance Services financial adviser Trish Gregory.

“That's the whole point of insurance. Just like car, home and contents, we need to think about the what ifs… You've got insurance when there's nothing wrong with them and you can take it through their life,” she said on a recent episode of The ifa Podcast.

Gregory traced her interest in childhood trauma insurance back to the start of her career, when a friend’s child was diagnosed with a brain tumour. Watching the family endure the long and traumatic treatment process - made even harder by their rural location - left a lasting impression.

While the child ultimately recovered, many families are not so fortunate, she said.

“If you have insurance on your small children, you then can look after them financially and not have to take all your money out of your superannuation or not have to continue to work until you're 70 or 80 years old,” Gregory added.

Like many types of insurance, childhood trauma cover can be complex, with pre-assessments a particular hurdle, Gregory said.

“Insurers know that there's so many pre assessments and only I think about 10 or 20% turn into enforced policies. Declines and exclusions are on the rise, especially mental health exclusions, and the process can just be so laborious.”

Gregory advises advisers to ease the process by understanding providers and selecting a few reliable insurers to work with.

“Have a look at your end-to-end process and figure out if we perhaps just need three main insurers,” Gregory said. “We start with those three to really make sure that we're streamlining our process and only underwrite with them.”

Ultimately, she said, while childhood trauma insurance addresses a sensitive and morbid topic, it provides clients not only with financial security but also peace of mind – a reassurance advisers should encourage their clients to consider.

To hear more from Gregory, click here.