We all know the importance of protection for adults, but if child cover doesn’t feature in the protection mix, you could be left exposed to financial consequences if your child suffers illness or injury.
When putting a protection plan in place, the main focus is naturally to insure against events impacting their own health. But in the case of parents with dependent children, a plan which doesn’t address the financial consequences of a serious child illness is incomplete.
Parents with children who suffer severe illness or trauma not only deal with enormous emotional strain but also are likely to suffer severe financial stress. They face unexpected indirect costs of treatment, recovery, time off work – all of which are not covered by Medicare or health funds.
A professional couple in their late thirties with two young children are committed to their careers and earn good salaries. They have two cars, and a 4 bedroom house in an affluent suburb.
They have a solid protection portfolio in place, the top income protection contract, term insurance with a solid sum insured, own occupation TPD cover and the best trauma insurance available.
If anything happens to either of them, they are covered.
But what if something terrible happened, to one of their children?
The fact is that children can suffer serious traumatic illnesses and accidents. In these circumstances, as parents, we would want to do everything in our power to help them, including being there for them.
The financial implications
Stopping work for months or even years to care for a seriously ill child can have devastating emotional consequences.
Additionally, there is likely to be substantial out-of-pocket costs associated with treatment, travel costs and medicines.
The late thirties and forties are the ages when people are generally at their most exposed financially. ABS figures1 show that for couples with children under 5, over 93% have household debt, and that for the same people, the average amount of debt is 2.5 times their annual household income. In both cases these figures represent the highest level of indebtedness of any life stage.
Hence, having appropriate life insurance coverage is important.Yet the majority of risk recommendations don’t include cover for this type of scenario.
Why child cover is a must. Consider the statistics…
A recent report from the Australian Institute of Health and Welfare (AIHW)2 revealed that in 2009, an estimated 7 per cent of Australian children had a disability and of these, over half had profound or severe core activity limitations (4 per cent). Compared with other children, those with a severe disability rely more heavily on parents and siblings. In fact, in the period 2009-10, over 57,600 children aged 0-14 used National Disability Association services (majority in their own home).
And did you know that on average, an Australian child under the age of 14 is diagnosed with blood cancer every 36 hours? The average length of treatment time for boys is two years and for girls it is three years3.
So with the possibility that any parent may need to take time off to support a sick child, why do we tend to overlook this type of cover? It is, after all, widely available and is far from expensive, with $100,000 cover in most cases only costing around $10 per month.
1 ABS Australian Social Trends 4102.0, 2009 http://abs.gov.au/AUSSTATS/abs@.nsf/okup/4102.0Main+Features60March%202009
2 AIHW Report ‘A picture of Australia’s Children 2012’
3 Leukaemia Foundation (2011) ‘Fact Sheet: blood cancers in children’, Leukaemia Foundation, Australia
Source: Zurich, August 2013