Real Stories. Real People - Kathy

Zurich Australia life insurance case study - KathyConsider the case of Kathy*, a 41-year old self-employed marketing consultant, married with two young sons.

She was healthy, active, and, with death cover, income protection and private health insurance in place, she thought she was well protected against any eventuality.

Kathy knew the missing piece in her protection portfolio was trauma insurance. But with income protection and private health cover in place, she wondered did she really need it? 

It turns out she did. 

In November 2009, Kathy was diagnosed with breast cancer. Two rounds of surgery followed, then chemotherapy and radiotherapy, and then the reconstruction surgeries. 

At the end of the day, Kathy wasn’t just a few hundred dollars out of pocket, or even a few thousand. After Medicare and the health fund had paid their parts, the gap costs came to tens of thousands of dollars. 

"For example, my out of pocket costs for radiotherapy were about $2,000 after Medicare and my health insurance had kicked in. The out of pocket cost I was quoted for reconstruction surgery was $10,000. And to pay for a year of Herceptin1 - a drug that has been shown to reduce the chance of breast cancer coming back by 52% compared with chemotherapy alone - I would have had to pay something like $80,000" said Kathy. 

"That’s nearly $100,000 in out of pocket costs. Of course when your life is at stake you naturally don't question the cost, you spend whatever it takes, provided you have the money in the first place."

"After your life has been touched by serious illness, you become aware of how precious the happy times with your loved ones really are."

Kathy says that she would love to spend more time with her children and to scale back her work, but the reality is that she just can't afford to. 

"A big city mortgage and day to day basics are expensive, and that's before all the medical bills are accounted for." 

"If I'd had trauma insurance when I was diagnosed, it would have given our family that financial cushion to allow me to work less. To have a lump sum payout in the bank would get rid of that everyday financial stress, and the one thing you really need to do once you've been seriously ill is to avoid stress."

But what about income protection? 

During the chemotherapy and radiotherapy treatments I was never able to work at more than 50% capacity, so certainly my income protection helped to replace some of my lost income (although the 75% limit means you are always behind compared to if you were working as normal). But the big gap is obviously all the unexpected out of pocket expenses, which were simply astronomical. 

Ironically, Kathy's financial adviser had previously encouraged her to take out trauma cover. 

"I was busy and felt on top of the world and I just didn't make it the priority it should have been. Eventually I applied, but I was diagnosed with cancer within a few weeks, so my cover hadn’t kicked in."

"I really hope that I can stop other people making the same mistake by telling my story. If you don’t have a large amount of cash set aside to cope with something like a serious illness, don't put it off. Just talk to your adviser straight away. This is not something that only happens to other people and the payout could make all the difference to you and your family."