Did you know you can get Critical Illness (Trauma) Insurance to provide cover for your children?
A referral partner recently asked us to put together a backgrounder on insurance products that provide Critical Illness (Trauma) cover for children in the Australian marketplace ‒ so here it is.
What is Critical Illness (Trauma) Insurance for children?
Critical Illness (Trauma) Insurance for children is offered by most of Australia’s major life insurers. The purpose is to provide a financial benefit (usually a single lump sum) to help cover the cost of medical treatment for your child in the event that they become seriously ill – or die.
Most policies currently available in the market provide cover against a list of various serious illnesses that are specified within the relevant policy’s product disclosure documents.
The level of benefit provided can vary from $100,000 to $500,000, depending upon the provider and the level of cover desired.
The definition of “child” ages varies from company to company but generally children between the ages of two or three (at the youngest) through to the ages of 17 or 18 are deemed to be “children” for the purposes of this type of cover.
Once your child reaches the top end of the age limit most insurers provide the ability to convert your child cover to an adult Critical Illness or Trauma policy.
However, it is important to note that there are significant differences between insurers regarding what “adult” insurance products to which you can attach “child cover,” and just as important, is how different insurers assess each child insurance cover application.
Some insurers require medical underwriting (a full assessment) of your child, while others require no underwriting but any pre-existing medical conditions your child has will be excluded from cover. Also, as noted above, the entry ages and ages at which it can be converted to an “adult” policy, vary from insurer to insurer.
AFRM can assist you with navigating these product differences and how to assess the various products available in the market to find the one that best suits your needs.
Why might I need this type of cover?
Perhaps ask yourself what would you do if your child fell seriously ill? Would you want the best medical treatment for your child and would you and/or your partner have the ability to not only pay for your child’s medical expenses but also to fund yourself while taking time of work to care for your child?
The entire family is impacted when a child falls seriously ill. Normal family routines are, of course, disrupted. And it is natural for parents to desire to spend as much time with their child as possible, to support them through recovery.
Would you be able to weather the increased financial strain that comes with scaling back or ceasing work completely during this time? This kind of situation is not covered by your own personal Income Protection cover. However, Child Critical Illness (Trauma) insurance can help in such a scenario. This is the value of the financial peace of mind this product can provide.
What kind of illnesses are covered?
As outlined above, this varies from one insurer to another.
As an example, following is the list of illnesses covered under TAL’s Child’s Critical Illness insurance product.
Heart conditions such as Cardiomyopathy (permanent) and Heart Attack (of specified severity)
Neurological conditions such Coma (of specified severity), Meningitis (resulting in permanent neurological deficit), Meningococcal Septicaemia (resulting in significant permanent impairment), Paralysis (permanent) and Stroke (resulting in neurological deficit)
Permanent conditions such as Blindness (permanent), Deafness (permanent), and Loss of Speech (permanent)
Organ disorders such as Chronic Kidney Failure (undergoing permanent dialysis) and Major Organ Transplants (of specified severity)
Cancer of specified criteria
Other events such as Aplastic Anaemia (requiring treatment), death and terminal illness.
Note: Each of these conditions has a special meaning, set out in the PDS and Policy Document (PDS). Child’s Critical Illness insurance covers only conditions that are listed in the PDS. The condition must also meet the level of severity as defined in the PDS.
Please request a copy from your adviser and read it before you make a decision to purchase this cover.
What is the level is serious illness among children in Australia?
The Australian Institute of Health and Welfare (AIHW) tracks the health of our community.
AIHW’s Australia's health 2020 report, released on 23 July 2020, included a section on the Health of children in Australia.
The report included the following chart illustrating the leading burdens of disease suffered by children in Australia:
The leading causes of burden of disease differed depending on age (See Figure 1):
Infant and congenital conditions accounted for most of the burden in children aged under five; four of the five leading causes of burden in this age group were from this disease group.
Among children aged 5–14, asthma, and mental disorders (including anxiety disorders and depressive disorders) contributed the most burden.
Disability
According to the Australian Bureau of Statistics (ABS) 2018 Survey of Disability, Ageing and Carers, it was estimated that around 7.7% (or 357,000) of Australian children aged 0–14 had disability. More boys (9.6%) than girls (5.7%) were affected by disability.
Around 1 in 20 (4.5%, or 211,000) children had a severe or profound core activity limitation and 5.2% (241,000) of children aged 5–14 had a schooling restriction.
Schooling restrictions are determined based on whether a person needs help, has difficulty participating, or uses aids or equipment in their education. Boys aged 5–14 were more likely than girls to have a schooling restriction (9.9% of boys and 5.6% of girls, respectively) (ABS 2019c).
Chronic conditions
According to the ABS 2017–18 National Health Survey (NHS), it was estimated that 46% of boys and 39% of girls aged 0–14 had one or more chronic conditions (ABS 2018c).
Chronic conditions, also known as long-term conditions or non-communicable diseases, refers to a wide range of conditions, illnesses and diseases that tend to be long- lasting with persistent effects.
Chronic disease can interrupt a child’s normal development and can increase the risk of being developmentally vulnerable at school entry (Bell et al. 2016).
According to the 2017–18 NHS, the two leading chronic conditions for children aged 0–14 were diseases of the respiratory system: 10% of children experienced asthma, and 10% experienced hay fever and allergic rhinitis.
The third and fourth most common chronic conditions related to mental and behavioural disorders, such as anxiety-related problems (5.7% of children) and problems of psychological development (5.7%).
The fifth most common chronic condition for children aged 0–14 was food allergies (5.5%) (ABS 2018c).
Injuries
In 2017–18, there were around 65,000 hospitalised injury cases among children aged 0–14, a rate of 1,400 per 100,000 children. Of these cases, 64,800 had a cause of injury recorded.
The leading causes of these injuries were:
falls (45%, or 29,300)
exposure to inanimate mechanical forces (such as being struck or cut by something other than another human or animal) (20%, or 13,100)
land transport accidents (9.5%, or 6,200) (Figure 2).
Overall, boys were 1.5 times as likely to sustain an injury that results in hospitalisation as girls (1,600 and 1,100 per 100,000 respectively).
These differences varied by age—from 1.3 times for ages 0–4, to 1.7 times among 10–14-year-olds.
Cardiovascular Disease
While a separate AIHW report, Heart, stroke and vascular disease—Australian facts, published in September 2021, stated that the incidence of Cardiovascular Disease among children under the age of 25 is low, it does happen, as illustrated in the following chart.
(Cardiovascular disease (CVD) includes a range of conditions that affect the heart and blood vessels. The most common and serious types of CVD include coronary heart disease, stroke and heart failure.)
Invasive meningococcal disease (meningitis)
Invasive meningococcal disease (IMD) is an uncommon but very serious infection that occurs when the meningococcal bacteria ‘invades’ the body from the throat or nose.
It usually appears as meningitis or sepsis. You can find more information on Meningococcal disease, including what symptoms to look out for, on the Meningococcal disease: Information for the public website.
There are multiple types of meningococcal disease which are called serogroups. Four serogroups of meningococcal bacteria (B, C, W, and Y) account for most cases of IMD in Australia.
An Australian Department of Health, Invasive Meningococcal Disease National Surveillance Report - 1 January to 30 June 2019, found that “the number of cases were highest in those under 5 years (n=23) followed by those aged 15-19 (n=14).”
Aplastic anaemia
Aplastic anaemia is a rare disorder in which the bone marrow fails to produce enough blood cells. This happens because the normal blood forming cells (stem cells) are replaced by abnormal fat cells.
Although aplastic anaemia is not a malignant disease (cancer) it can be very serious, especially if the bone marrow is severely affected and there are very few blood cells left in circulation. Without adequate numbers of blood cells people with aplastic anaemia can become anaemic (low red blood cells) and more susceptible to infections (low white blood cells), and to bleeding and bruising more easily (low platelets).
The term aplastic anaemia is usually understood to refer to the acquired disorder which is a non-malignant bone marrow disease.
According to the Leukaemia Foundation, aplastic anaemia is more commonly diagnosed in patients aged between the ages of 10 and 20, and over 40.
How can AFRM help?
Australian Financial Risk Management (AFRM) is a specialist financial risk advice practice. We tailor the most appropriate risk management strategies for you.
The objective of the advice we provide is to assist you to make informed decisions about managing the financial risks you may encounter.
This includes, protecting your cash flow or your income and assets in order to be able to pay off debts and provide for lifestyle changes in the event of misadventure.
AFRM can assist you with navigating the broad array of Critical Illness (Trauma) Insurance for children products offered in the Australian market.
We can help you assess the various products available in the market to find the one that best suits your needs.
Links to more information about the various products currently available in the Australian market: