Trauma insurance vs health insurance

Health insurance is a cost-reimbursement product. When you need surgery, a specialist consultation, diagnostic imaging or a course of unfunded medication, the insurer pays for it — usually directly to the provider — subject to the policy limits, excess and exclusions. It is used often, in small and medium amounts, and it does not care whether you can work.

Trauma insurance is a lump sum product. When a listed condition is diagnosed and the definition is met, the insurer pays you an agreed amount and the relationship ends there. It is used rarely, in large amounts, and there are no restrictions on the spending. It does not pay for treatment and it does not care what treatment costs.

The confusion arises because both respond to serious illness. But the person who has surgery in a private hospital and is back at work in six weeks needed health insurance. The person who spends a year in and out of treatment, whose partner cuts back to part-time, and whose mortgage does not pause, needed trauma cover or income protection. Frequently these are the same person at different points in the same illness.

A practical order of priority for most working New Zealand households is: income protection first, because it covers every illness and injury rather than a list; then health insurance, because it is used far more often and manages the treatment cost that trauma does not; then trauma cover, sized to buy time. That order changes for people with substantial savings, a small mortgage, or an employer that already provides health cover.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether your health policy includes a non-Pharmac drug benefit, and what the limit is.
• Whether health insurance premiums are age-rated and how steeply they rise, since that decides affordability at 70.
• How pre-existing conditions are handled on each — health insurance typically excludes them ongoing, trauma is underwritten once at the start.
• Whether an employer scheme already provides health cover, and what happens to it when you leave.
• Whether the trauma sum insured is sized to income replacement or to treatment costs — they produce different numbers.
• That neither product pays a monthly income, which is a gap people discover late.

Every New Zealand insurer writes trauma insurance in new zealand to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Trauma cover is underwritten once and then guaranteed; health insurance generally reassesses nothing but excludes pre-existing conditions permanently. The order in which you buy them matters.
• Health insurance premiums are usually age-rated with no level option, so the long-run cost profile differs sharply from trauma cover.
• An adviser can size trauma cover against what health insurance already covers, so you are not paying twice for the same risk.
• Where an employer provides health cover, an adviser can check whether continuation to a personal policy is available on leaving.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.