How advisers can fill the gap in trauma cover

According to a recent PPS Mutual report, Reducing the Trauma, despite the importance and value of private health cover, for many it, can also lead to dramatically higher out-of-pocket costs.

Dr John Cummins, PPS Mutual chief medical officer, told ifa that part of the strain that out-of-pocket costs can put on individuals dealing with trauma is that they believe their cover is more comprehensive than it is.

“There’s a lot of, I’d say, ignorance by all variety of professionals out there as to what they believe they’re covered for, and of course if you’re desperate, you will mortgage your house to pay for the $100,000 treatment because it may make the difference between saving your life or not,” Dr Cummins said.

“I think one of the points I would make is that we’ve seen amazing leaps forward in medical technology, but they’re all coming at a cost and they’re all expensive.”

PPS Mutual chief executive Michael Pillemer added that a factor that is often overlooked is the impact that a partner’s health issues can have, even if not directly.

“If the partner of the person who’s being insured were to suffer a trauma, what happens if the partner has cancer and they need to go through chemo?” Pillemer told ifa.

“It’s not just the out-of-pocket expenses and the loss of income, the person might want to be there with him when they go for the chemo. They might have to pick up the kids from school. They might not be wanting to sit in the office till 7pm or, or whatever hours they usually work, because they will want to get home and be with their partner.

“They may want to go away on a holiday and something like that. I’ve seen the value in enabling people to have that freedom to choose and to be able to do all of those sorts of things.”

This is where he believes that financial advisers can provide value to their clients, by having the structures in place to provide them with that choice and “peace of mind to know this side of things is taken care of”.

“Of course, the advisers assisting with the claims as well. That’s another part of the process which is invaluable in terms of following up with their claims administrators, following up with their medical doctors, getting specialists reports, all of that sort of thing,” Pillemer said.

“Because clients don’t have the headspace for that sort of thing.”

Dr Cummins added that because taking time off can impact their income as well as their career trajectory, advisers need to educate their clients so that they can be prepared before anything happens.

“[Advisers need to] paint the perspective that this will ripple throughout your whole family,” he said.

“What if the kids need to see a psychologist, who’s going to pay for that, for example? But also, I think, appropriately highlight and educate the potential client of how the money system works within private health care.”

Impact of adviser losses

Pillemer noted that the drastic reduction in the number of advisers in recent years has had a detrimental impact on the ability to educate clients that trauma can have.

“There are a lot of advisers who have left the industry and quite a lot of risk specialists as well,” he said.

“I do think we have this real gap in the market, which I think the existing advisers are trying to take up.”

In order for advice firms to handle the need for risk advice, Pillemer said there are a few options that should be considered.

“One option is to bring some specialist expertise in-house to be able to cover these needs,” he said.

“Another option is to refer clients out to specialist risk advisers or other advisers who can help cover these needs, either on the basis of strategic alliances or just referring them out to other firms.

“I think it’s vital that advisers make sure that they cover their clients in these sorts of scenarios.”

Noting that there are 14.3 million people who don’t have any trauma insurance, Pillemer stressed that this is an area that needs to be addressed.

“People have got some cover through the superannuation fund, I’d argue that it’s often not adequate or it’s not the right sort of cover, but at least there often is some sort of cover, but people don’t have trauma cover through their superannuation funds,” he added.

“There’s a real gap in this area.”