Get Behind It: Let’s Talk About Bowel Cancer and Insurance

Sadly, bowel cancer is one of the most prevalent causes of cancer-related deaths in Australia, claiming the lives of around 4100 people each year, but treatments are successful is detected early.
While the health impacts are significant, as Rachel Leong from BT Financial Group writes, the financial impact can also be high; however, life insurance provides a range of ways to offset this problem.
Being aware of the issue as an adviser is a good place to start but knowing the features and benefits that policies offer can provide valuable assistance at claim time.

Bowel cancer makes for an awkward conversation. We don’t like to talk about it, but we should – sadly, bowel cancer claims the lives of 80 Australians every week, making it Australia’s second biggest cancer killer. You may have recently heard more about this disease as Bowel Cancer Australia and its supporters have run a public awareness campaign throughout the month of June, to change attitudes and ultimately help save lives. If detected early, almost all cases of bowel cancer can be cured.

Another good reason to talk about bowel cancer is the significant costs associated with such a serious disease – estimated to be over $174,000, including loss of productivity, for men in the working age bracket.2

Many people may not be aware that insurance can help them and their families manage the medical fees and living costs related to bowel cancer. There is still a great deal of confusion about the right level of coverage that can provide support in the context of a cancer diagnosis.

Rather than worrying about bills piling up, bowel cancer sufferers should be able to focus on their recovery. While everyone’s financial situation is different, the five tips below can help advisers guide clients through the different types of cover on offer.

1. Cover medical costs during the recovery period through living (trauma) insurance.

While medical developments are extremely promising for those with bowel cancer, accessing new medicines can be expensive. The cost borne by the individual can be extremely high, as there is a significant time lag between subsidised access to new cancer treatments for Australian cancer patients3 – and unfortunately those with bowel cancer have had the longest wait for treatment funding.4

Living insurance (also known as trauma insurance) can provide support while your client is recovering and receiving treatment. Upon the diagnosis of cancer, this type of insurance can provide a lump sum payment, among other benefits. The amount can be used to pay for medical and accommodation costs. It can also be used to reduce debt, which may no longer be serviceable if your work status needs to be re-evaluated.

2. If your client becomes disabled and can no longer work, total and permanent disability (TPD) insurance applies.

In more serious circumstances, if bowel cancer causes your client to become disabled to the extent they will never work again, TPD insurance allows for a lump sum payment. Many Australians have this type of cover through their super, however they often don’t have enough.

There are two main types of TPD insurance – ‘own occupation’ and ‘any occupation’.  Own occupation TPD insurance proceeds are payable if your client is permanently unable to work in their current occupation.  Any occupation TPD insurance proceeds are payable if they are permanently unable to work in an occupation that they would be suited to with their education, training and experience.  Some policies will also pay a benefit if the client is able to work, but in a severely reduced capacity.

An own occupation TPD policy is more likely to result in a claim payment as the definition is more generous.  However, own occupation TPD premiums are approximately 50% more expensive than any occupation TPD premiums.

3. Through income protection (IP) insurance, your client can receive up to 80% of their income in monthly payments, to continue to pay bills.

Whilst people rarely consider how they would cope if they suffered from a disability, the reality is one in three Australians are disabled for more than three months before reaching 65 years of age.5 Income protection (IP) payments replace part of the income your client would usually earn, if they become disabled and cannot work.

We all know that when you are off work and your salary stops, the bills don’t.  And your client you may not have enough sick leave to ensure that their family receives income for the entire time they are off work.

IP insurance provides a monthly benefit that can replace 75-80% of your client’s income.  This will ensure that bills such as the mortgage or rent, electricity, school fees are all paid if your client is temporarily or permanently ill or injured.  Sometimes IP is used together with living or trauma insurance to cover the full amount of income lost.

4. Look out for insurance policies for homemakers.

If your client is a homemaker, he or she can obtain IP insurance, which can provide income to pay for someone to perform normal household duties.  If it’s not practical or financially viable for their partner to take time off work to run the household, obtaining IP insurance for homemakers might be an appropriate solution.

There is also a TPD insurance policy available for homemakers where proceeds are payable if they are permanently unable to perform normal household duties.  The funds can be used to pay for someone to perform these duties.

5. Life insurance helps pay off debts and maintain your client’s standard of living.

Life insurance provides a lump sum payment if your client becomes terminally ill, or passes away.  If they are deemed to have less than 24 months to live, an advanced payment can be made for terminal illness.

Claim proceeds can be used to pay off debts and provide funding to allow the client’s family to maintain their standard of living, including continuing to live in their current home.

Next steps

The types of cover that suit your client will depend on various factors. Does the money need to replace lost income and if so, for how long? Is it necessary to pay off debts? What assets are available that could be sold quickly?

Not all insurance policies are the same. Often it is difficult to determine how much cover is required and this is where advisers can step in and help.

References

  1. Bowel Cancer Australia, https://www.bowelcancerawarenessmonth.org/bowel-cancer-awareness-month
  2. Calculation based on 2005 figures for NSW collated by the Cancer Council, indexed over 11 years, at an average annual inflation rate of 2.5%, https://www.cancercouncil.com.au/wp-content/uploads/2010/11/costofcancer_summary.pdf
  3. Bowel Cancer Australia’s comment on Medicines Australia’s Oncology Industry Taskforce Access to Cancer Medicines in Australia Report, September 2013, https://medicinesaustralia.com.au/policy/oncology-industry-taskforce/
  4. Bowel Cancer Australia, https://www.bowelcanceraustralia.org/access-to-treatment.
  5. Institute of Actuaries of Australia, 2007

Rachel Leong is the Product Technical Manager for Life Insurance at BT Financial Group

  • Bentley Klein

    Rachel, thank you for writing this article as this issue has always been very dear to me and now even more so. This is my story.
    I am an adviser of over 30 years. I run a business in St Kilda Road and employ around 13 -14 people. I have always lived a very healthy lifestyle and since 45 have run 11 marathons including three of the 6 major marathons. The ones I have completed are New York (twice) Boston and Chicago. In 2015, I ran three in a 12 month period including Boston and the Melbourne Marathon on the 18th October. Just after returning from Boston in April I was very busy finalizing a significant business acquisition which would double the size of my business including doubling the size of my staff. As they say there’s never a good time to get sick. For me this couldn’t be more true. On the 22nd October, 3 months after settling on the new business and about 5 months after noticing blood, I had a colostomy and was diagnosed with Bowel Cancer. I the healthy person, with a great family and a very good business and living the dream, Bowel cancer. You got to be joking. It was true. I was only 54 and I regard myself as a very young 54 without any grey matter and a youthful and cheeky personality for anyone that knows me. Now nearly 2 years after diagnosis, and having gone through Treatment and severe surgery and colostomy bags and lots and lots of residual after effects, Having been in and out of work for 12 -18 months, I am now back to working full time, Training 3 -4 times a week again for the Melbourne half marathon with my goal to running my 4th major the London marathon a real reality in April next year with 5 of my dear running mates. Our firm Axios financial solutions has been providing fee for holistic advice. Insurance has always been the foundation of ensuring families can live a comfortable lifestyle in good times but with the financial support when health changes. I am and have always been a firm believer that before an adviser should encourage any client to take out any policy they need to assess their own situation as they would any clients. I am concerned that there are too many advisers out there selling insurance and giving financial advice but at the very same time are inadequately covered and are not doing things they are advising their clients to do. It doesn’t surprise me if they aren’t as successful as they would like to be. I was well protected for an event that was never going to happen to me and whilst my financial situation would not have been a disaster, without my Trauma policy I had the comfort of knowing that my financial affairs were always in order. I believe this had a profound and positive impact on my mental state and my ability to get back to health quicker. My ongoing medical checks continue to be excellent and I am feeling fantastic. I encourage anyone out there to spread the word and encourage people to look at the warning signs for maintaining good health but I encourage every adviser to reassess their own needs. If you find you have a gap and sort it out then the stories you tell your clients will give them greater conviction to do what’s right by themselves and their families.