Most families run a tight ship when it comes to finances. There’s money for the mortgage, the utilities, the school fees, child care, general living expenses and perhaps a holiday most years. But what happens if the ship hits some stormy weather?

That storm can be triggered not only by losing your job or becoming sick, but also if someone in your family requires extensive medical care.

In a perfect world, no child would be ill but sadly that is not the case. For instance, each year approximately 600 Australian children are diagnosed with cancer¹. Each year there are also around 1,000 spinal cord injuries to children, 544,000 children are admitted to casualty, and 200,000 children become critically ill².

Figures from the Australian Bureau of Statistics (ABS) indicate that 8 per cent of children aged 15 or under will suffer some type of disability³. The ABS defines this as the presence of any limitation, restriction or impairment which has lasted for at least six months and restricts everyday activities.

Additional Financial Burden

Sick children need a lot of care and attention, and the family may be placed under additional financial pressures. This can prove difficult to deal with, especially if you have other children to care for. Aside from the emotional turmoil and feelings of helplessness, you still need to find time to look after the rest of the family.

Let’s take Tom, aged 9, who developed childhood leukaemia resulting in long stays in hospital. Mum Sally found it impossible to keep up with her part-time job and look after Tom as well, which resulted in the family losing an income.

Even though she now had the time to spend at the hospital, her other two children, Lucy, 5, and Ben, 7, still needed to be cared for both before and after school. This was not previously an issue as Sally was working from 10 am to 2 pm, and she was there for the children when they were not at school.

Medical costs also need to be taken into account.

At least the family lived in a major capital city, but if they had lived in regional Australia they may have had to add the costs of accommodation and travel to seek treatment from specialists at the city hospital.

Thankfully, after discussions with their financial adviser, Sally and her husband Rick had the foresight to take out trauma insurance for themselves and had opted to buy extra cover for their children.

Child trauma protection

Most insurance providers offer children’s trauma insurance as an adjunct to the adult trauma policy, and its importance cannot be underestimated.

The insurance usually covers children aged from 2 to 16 years old, although this can vary and the premiums are significantly lower than those for an adult. Sums insured can be as high as $200,000.

With this cover, Sally and Rick received a lump sum payment which covered all the associated expenses of Tom’s illness.

Had his illness been different, for example if he became wheelchair-bound, there would have also been money available to pay for modifications to their home.

Most trauma insurance policies cover such events as blindness, cancer, major head trauma and severe burns. Many policies offer a continuation option, so that once the child becomes a young adult, they can convert it to their own contract.

As with all insurance policies, it is important that you choose one that best suits the individual needs of your family. Every policy is different, with different inclusions and exclusions. Consequently, it is wise to get advice to help you navigate your way around all the policies and options available.

It is also possible for grandparents to cover their grandchildren through their stand-alone life/trauma policy. Of course, many people in their 60s and 70s may no longer have life insurance if dependent children and having a mortgage are things of the past. Nevertheless, the option is there.

Insurance – whether life, income protection or trauma – is all about taking care of your family should you lose your ability to earn an income.

It may be time to review your insurance needs with your adviser, to revisit trauma insurance, and the different options available. Including your children in the cover is worth considering as your ability to work may be impeded should they suffer a significant illness or injury. For a complimentary 45 minute Insurance review please contact us

1 Australian Cancer Research Foundation
2 Comminsure Statistics, 2007
3 ABS, 4446.0 – Disability, Australia, 2009